Which one of the following illustrates an elastic demand?
A)A 10 percent rise in price leads to a 5 percent decrease in quantity demanded.
B)A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.
C)A price elasticity of demand equal to 0.2.
D)A price elasticity of demand equal to 1.0.
E)A price elasticity of demand equal to zero.

Question

Quizplus · Accepted Answer

An elastic demand is one in which a small change in price leads to a large change in quantity demanded. Option B illustrates this by showing that a 10 percent rise in price leads to a 20 percent decrease in quantity demanded, indicating a high degree of sensitivity to price changes. Options A, C, D, and E do not clearly demonstrate this level of elasticity.

Which One of the Following Illustrates an Elastic Demand