question archive When the price of a product is increased 15 percent, the quantity demanded decreases 10 percent
When the price of a product is increased 15 percent, the quantity demanded decreases 10 percent
Subject:EconomicsPrice:2.88 Bought3
When the price of a product is increased 15 percent, the quantity demanded decreases 10 percent. We can therefore conclude that the demand for this product is:
a. Elastic
b. Inelastic
c. Cross-elastic
d. Unitary elastic
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The correct answer is b. Inelastic.
The percentage change in demand is lower than the percentage change in price. This means that the value of the price elasticity of demand of the product will be lower than 1. This means that the product has a relatively inelastic demand.
