At a price of $2,the quantity demanded for pens is 12.When the price increases to $3,the quantity demanded for pens is 10.The price elasticity of demand for pens is
A) perfectly inelastic.
B) inelastic.
C) horizontal.
D) elastic.
E) perfectly elastic.

Question

Quizplus · Accepted Answer

The price elasticity of demand (PED) measures how much the quantity demanded of a good responds to a change in the price of that good. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the quantity demanded decreases from 12 to 10 (a decrease of 2/12 = 1/6 or approximately 16.67%) when the price increases from $2 to $3 (an increase of 1/2 = 50%). The PED is therefore 16.67% / 50% = 0.3333, which is less than 1, indicating that the demand is inelastic (i.e., the quantity demanded is relatively unresponsive to price changes).

At a Price of $2,the Quantity Demanded for Pens Is