If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza,then the elasticity of demand for pizza:
A)is equal to 0.5 and demand is inelastic.
B)is equal to 0.5 and demand is elastic.
C)is equal to 2 and is elastic.
D)is equal to 2 and is inelastic.
E)cannot be determined from the information provided.

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, it is -25% / 50% = -0.5, indicating inelastic demand.

If a 50 Percent Increase in the Price of Pizza