A 20 per cent increase in the quantity of pizza demanded results from a 10 per cent decline in its price. The price elasticity of demand for pizza is
A) 10.0.
B) 20.0.
C) 2.0.
D) 0.5.

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, which in this case is (20%/(-10%)) = -2.0. The negative sign is often ignored when discussing elasticity, so the answer is 2.0.

A 20 Per Cent Increase in the Quantity of Pizza