The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range

A) has declined.
B) is of unit elasticity.
C) is inelastic.
D) is elastic.

Question

Gagandeep singh · Accepted Answer

Final Answer : D, Explanation :  The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, the quantity demanded increased by 20% ([60-50]/50), and the price decreased by 10% ([90-100]/100). Since the percentage change in quantity demanded is greater than the percentage change in price, the demand is considered elastic.

The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range

A) has declined.
B) is of unit elasticity.
C) is inelastic.
D) is elastic.

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Learning Objectives

Related questions

The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price rangeA) has declined.B) is of unit elasticity.C) is inelastic.D) is elastic.

Definitions

Learning Objectives

Learning Objectives

Related questions

The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range

A) has declined.
B) is of unit elasticity.
C) is inelastic.
D) is elastic.