If the price elasticity of demand for a product is 5,and prices decrease 10 percent then demand will _____
A)increase by 5 percent.
B)increase by 10 percent.
C)increase by 50 percent.
D)decrease by 50 percent.
E)decrease by 3 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is % Change in Quantity Demanded / % Change in Price. Given a 10% decrease in price and an elasticity of 5, the demand will increase by 50% (5 * 10%).

If the Price Elasticity of Demand for a Product Is