When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:
A) perfectly inelastic.
B) inelastic.
C) unitary elastic.
D) elastic.
E) perfectly elastic.

Question

Quizplus · Accepted Answer

The fact that the quantity demanded changes by 20% in response to a 5% price drop means that demand is relatively responsive to changes in price, indicating that the elasticity of demand is greater than 1. Therefore, the correct answer is D) elastic.

When the Price of Scooters Drops by 5%, the Quantity