If the price of a product is lowered from $300 to $270, and as a result the quantity demanded increases from 25 to 30 units, we know that in that range:
A)demand has declined.
B)demand is elastic.
C)demand is unit elastic.
D)demand is inelastic.
E)demand is perfectly elastic.

Question

If the price of a product is lowered from $300 to $270, and as a result the quantity demanded increases from 25 to 30 units, we know that in that range:
A)​demand has declined.
B)​demand is elastic.
C)​demand is unit elastic.
D)​demand is inelastic.
E)​demand is perfectly elastic.

Quizplus · Accepted Answer

Demand is considered elastic when the percentage change in quantity demanded is greater than the percentage change in price, leading to an absolute value of price elasticity of demand greater than 1. In this case, the price decreased by 10% ($30 decrease from $300), and the quantity demanded increased by 20% (5 unit increase from 25 units), indicating an elastic demand.

If the Price of a Product Is Lowered from $300