When a 10% decrease in price yields more than a 10% increase in quantity sold, the demand is described as

When a 10% decrease in price yields more than a 10% increase in quantity sold, the demand is described as

• A. Inelastic
• B. Elastic
• C. Unitary elastic
• D. Perfectly inelastic

Answer: (B)

Understanding price elasticity of demand: it measures how much quantity demanded responds to a price change. If a 10% drop in price leads to a quantity increase that is greater than 10%, the demand’s responsiveness is strong, so the elasticity magnitude is greater than one. That is called elastic demand. It means buyers react a lot to price changes, and lowering the price yields a disproportionately larger rise in quantity sold (often accompanied by a rise in total revenue). If the quantity rose by less than 10%, the demand would be inelastic; if it rose exactly by 10%, it would be unit elastic; if the quantity didn’t change at all, it would be perfectly inelastic.

Understanding price elasticity of demand: it measures how much quantity demanded responds to a price change. If a 10% drop in price leads to a quantity increase that is greater than 10%, the demand’s responsiveness is strong, so the elasticity magnitude is greater than one. That is called elastic demand. It means buyers react a lot to price changes, and lowering the price yields a disproportionately larger rise in quantity sold (often accompanied by a rise in total revenue). If the quantity rose by less than 10%, the demand would be inelastic; if it rose exactly by 10%, it would be unit elastic; if the quantity didn’t change at all, it would be perfectly inelastic.