When the price of milk increases 6%,quantity demanded decreases 4%.The price elasticity of demand for milk is
A) perfectly elastic.
B) elastic.
C) inelastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -4%/6% = -0.67 (negative sign indicates inverse relationship). Since the absolute value is less than 1, the demand is inelastic.

When the Price of Milk Increases 6%,quantity Demanded Decreases 4