A 15% decrease in the price of radios causes the quantity demanded to rise by 16%. The demand for radios is
A)very elastic.
B)slightly elastic.
C)unit elastic.
D)slightly inelastic.
E)very inelastic.

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 16% / 15% = 1.07, which indicates that the demand is slightly elastic (greater than 1 but not significantly so).

A 15% Decrease in the Price of Radios Causes the Quantity