A Value of the Absolute Price Elasticity of Demand Equal

question 83

Multiple Choice

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.