Suppose 50 loaves of bread are demanded at a particular price.If that price rises by 2 percent,the quantity demanded decreases to 49.5 loaves of bread.This implies:
A)demand is elastic.
B)demand is unit-elastic.
C)the price elasticity of demand is equal to 2.
D)demand is inelastic.
E)consumers are very responsive to a price change.

Question

Quizplus · Accepted Answer

A 2 percent increase in price resulted in a decrease of only 0.5 loaves of bread, which is a small change in quantity demanded. This indicates that the demand for bread is inelastic, meaning that consumers are not very responsive to price changes. If demand were elastic or unit-elastic, a small increase in price would result in a larger decrease in quantity demanded.

Suppose 50 Loaves of Bread Are Demanded at a Particular