If the quantity of tickets to the fair sold decreases by 10 percent when the price increases by 5 percent, the price elasticity of demand over this range of the demand curve is:
A) price elastic.
B) price inelastic.
C) perfectly inelastic.
D) unitary elastic.

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. Here, it is -10% / 5% = -2, which indicates that the demand is price elastic (elasticity greater than 1 in absolute value).

If the Quantity of Tickets to the Fair Sold Decreases