Suppose that quantity demand falls by 30% as a result of a 5% increase in price.The price elasticity of demand for this good is
A)inelastic and equal to 6.
B)elastic and equal to 6.
C)inelastic and equal to 0.17.
D)elastic and equal to 0.17.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -30% / 5% = -6, which is elastic.

Suppose That Quantity Demand Falls by 30% as a Result