If the Price of a Good Increases by 10 Percent,its

question 65

Multiple Choice

If the price of a good increases by 10 percent,its quantity demanded drops by 50 percent.The price elasticity of demand is:

• A) 1.0
• B) 0.2
• C) 5.0
• D) 2.0

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Definitions:

More Elastic

Referring to a greater sensitivity of quantity demanded or supplied to changes in price, compared to goods or services with less elasticity.

Demand Elasticity

A measure of how much the demand for a product or service changes in response to changes in its price or other factors.

Elasticity of Demand

The measure of how much the quantity demanded of a good responds to a change in the price of that good.

Perfectly Inelastic

A market situation where the quantity demanded or supplied does not change in response to a change in price.