Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.
-Suppose 50 loaves of bread are demanded at a particular price. If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread. This implies that the:
A)demand is elastic.
B)demand is unit-elastic.
C)price elasticity of demand is equal to 2.
D)demand is inelastic.
E)income elasticity of demand is equal to 0.5.

Question

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. 
-Suppose 50 loaves of bread are demanded at a particular price. If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread. This implies that the:
A)demand is elastic. 
B)demand is unit-elastic. 
C)price elasticity of demand is equal to 2. 
D)demand is inelastic. 
E)income elasticity of demand is equal to 0.5.

Quizplus · Accepted Answer

The decrease in quantity demanded is less than the increase in price, indicating that the demand is not very responsive to changes in price. This means that the price elasticity of demand is less than one and demand is inelastic.

​Figure 53

Figure 53