If a 1 percent change in price causes a 5 percent change in quantity demanded, then demand is price inelastic.

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If a 1 percent change in price causes a 5 percent change in quantity demanded, then demand is price elastic. In price elastic demand, a change in price causes a relatively larger change in quantity demanded. In price inelastic demand, a change in price causes a relatively smaller change in quantity demanded.

If a 1 Percent Change in Price Causes a 5