If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units,then demand is _____
A)elastic.
B)inelastic.
C)unit elastic.
D)zero.
E)perfectly elastic.

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, the quantity demanded decreases by 20% ([10-8]/10), and the price increases by 100% ([200-100]/100). The elasticity is 0.2 (20%/100%), which is less than 1, indicating inelastic demand.

If an Increase in the Price of a Product from $100