A 2 percent increase in the price of rice leads to a 2 percent decrease in the quantity demanded of rice. The absolute price elasticity of demand is
A) 3.
B) 1.
C) 0.1.
D) 6.

Question

Quizplus · Accepted Answer

The absolute price elasticity of demand measures the percentage change in quantity demanded divided by the percentage change in price. In this case, we have a 2 percent increase in price leads to a 2 percent decrease in quantity demanded, so the absolute value of the elasticity is 2%/2% = 1. Therefore, the answer is B.

A 2 Percent Increase in the Price of Rice Leads