A value of the absolute price elasticity of demand equal to 0.5 indicates that
A) a 0.5% decrease in price leads to a 1% increase in quantity demanded.
B) a 2% decrease in price leads to a 25% increase in quantity demanded.
C) a 1% increase in price leads to a 5% decrease in quantity demanded.
D) a 1% increase in price leads to a 0.5% decrease in quantity demanded.

Question

Quizplus · Accepted Answer

The absolute price elasticity of demand of 0.5 means that for every 1% increase in price, the quantity demanded decreases by 0.5%.

A Value of the Absolute Price Elasticity of Demand Equal