If the elasticity of demand for mothballs is 0.50, then which of the following is true along the demand curve for mothballs?
A)A 20 percent increase in the price of mothballs will lead to a 10 percent decrease in the quantity of mothballs demanded.
B)A 10 percent increase in the price of mothballs will lead to a 20 percent decrease in the quantity of mothballs demanded.
C)A 20 percent increase in the price of mothballs will lead to a 10 percent increase in the quantity of mothballs demanded.
D)A 10 percent increase in the price of mothballs will lead to a 20 percent increase in the quantity of mothballs demanded.
E)A 20 percent increase in the price of mothballs will lead to a 5 percent decrease in the quantity of mothballs demanded.

Question

Quizplus · Accepted Answer

The elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. With an elasticity of 0.50, a 20 percent increase in price leads to a 10 percent decrease in quantity demanded (0.50 * 20% = 10%).

If the Elasticity of Demand for Mothballs Is 0