If the Value of the Price Elasticity of Demand Is

question 127

Multiple Choice

If the value of the price elasticity of demand is 0.2, this means that:

• A) a 20 percent decrease in price causes a 1 percent increase in quantity demanded.
• B) a 0.2 percent decrease in price causes a 1 percent increase in quantity demanded.
• C) a 5 percent decrease in price causes a 1 percent increase in quantity demanded.
• D) a 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded.
• E) a 100 percent decrease in price causes a 200 percent increase in quantity demanded.