If the demand for bananas has a high price elasticity, then a 5 percent decrease in the price of bananas will result in
A)a more than 5 percent increase in the quantity demanded.
B)a less than 5 percent increase in the quantity demanded.
C)no change in the quantity demanded.
D)a more than 5 percent decrease in the quantity demanded.
E)a less than 5 percent decrease in the quantity demanded.

Question

Quizplus · Accepted Answer

If the demand for bananas has a high price elasticity, a small decrease in price will cause a relatively larger increase in the quantity demanded. This is because consumers are highly responsive to changes in price and will be more willing to purchase bananas at a lower price. Therefore, a 5 percent decrease in the price of bananas will result in a more than 5 percent increase in the quantity demanded.

If the Demand for Bananas Has a High Price Elasticity