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.

Question

Quizplus · Accepted Answer

The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price, here -0.5/1 = -0.5. By convention, the price elasticity of demand is expressed in terms of its absolute value.

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