Question : Let's say that a 5% price increase causes the quantity demanded to fall by 10%. Demand's own-price elasticity is equal to:
Option 1: 2
Option 2: 0.5
Option 3: 5
Option 4: None of the above
Answer (1)
23rd Jan, 2024
Correct Answer: 2
Solution :
The elasticity of demand (Ed)= Percentage change in quantity demanded / Percentage Change in Price
The elasticity of demand (Ed)= 10%/5%=2
Hence option a is the correct answer.
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