If the price of electronic readers falls 6 percent and quantity demanded rises by 9 percent, the elasticity of demand is ______ in absolute value, so demand is ______.
A) 3.0, elastic
B) 15; inelastic
C) 0.67; inelastic
D) 1.5; elastic

Question

Quizplus · Accepted Answer

Elasticity of demand = (% Change in Quantity Demanded)/(% Change in Price)
Using the information given, we get:
Elasticity of demand = (9%)/(6%) = 1.5
Since elasticity is greater than 1, demand is elastic. Therefore, the correct answer is D.

If the Price of Electronic Readers Falls 6 Percent and Quantity