There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) perfectly elastic.
E) unitary elastic.

Question

Quizplus · Accepted Answer

When the quantity demanded decreases more than the proportional increase in price, demand is said to be elastic. Therefore, the price elasticity of demand for cupcakes is elastic.

There Was a More Than Proportional Decrease in Quantity Demanded