The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. From this we can conclude that the demand for X in this price range:
A) has declined
B) is of unit elasticity
C) is inelastic
D) is elastic

Question

Quizplus · Accepted Answer

When the price of X is reduced, the quantity demanded increases. This indicates that the demand for X is responsive to changes in price and therefore, is elastic. If the demand were inelastic, the change in price would have resulted in a smaller change in the quantity demanded. Unit elasticity would also imply that the percentage change in the quantity demanded is equal to the percentage change in price, which is not the case here.

The Price of Product X Is Reduced from $100 to $90