The price of product X is reduced from $50 to $45 and, as a result, the quantity demanded increases from 120 to 140 units. Therefore, 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

The demand is considered elastic when the percentage change in quantity demanded is greater than the percentage change in price, which is the case here. The price reduction of 10% ($5/$50) leads to an increase in quantity demanded of 16.7% (20/120), indicating elasticity.

The Price of Product X Is Reduced from $50 to $45