If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent,then the price elasticity of demand has a value of:
A)0.05.
B)0.5.
C)2.
D)5.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -0.5% / 1% = -0.5, which is 0.5 in absolute value.

If the Price of Textbooks Increases by One Percent and the Quantity