If the Price of Textbooks Increases by One Percent and the Quantity

question 101

Multiple Choice

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the price elasticity of demand is equal to:

• A)0.05.
• B)0.5.
• C)2.
• D)5.

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Definitions:

Midpoint Method

A technique used in economics to measure the elasticity of a variable without the influence of the starting and ending points.

Price Elasticity

A measure of how sensitive the quantity demanded of a good is to a change in its price.

Quantity Demanded

The overall volume of a good or service buyers are prepared and capable of acquiring at a designated price during a specified period.

Time Horizon

The length of time over which an investment or a project is intended or expected to occur.