A 4 percent increase in the price of beer will cause a 1 percent decline in the quantity of beer demanded. The demand for beer is:
A) elastic.
B) unitary elastic.
C) inelastic.
D) elastic at 4 (in absolute value).

Question

Quizplus · Accepted Answer

The demand for beer is inelastic because a 4 percent increase in price leads to only a 1 percent decline in quantity demanded, which means that the percentage change in quantity demanded is less than the percentage change in price.

A 4 Percent Increase in the Price of Beer Will