If the percentage change in quantity demanded divided by the percentage change in price is:
A) positive, demand is price elastic.
B) negative, demand is price inelastic.
C) less than 1 (absolute value), demand is price elastic.
D) greater than 1 (absolute value), demand is price 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. If this value is greater than 1 in absolute terms, it means that the quantity demanded changes by a greater percentage than the price does, indicating price elasticity.

If the Percentage Change in Quantity Demanded Divided by the Percentage