Answer to Question #153936 in Economics for Zhbdsbs

Question

Assuming that the price deceases from $10 to $5 and the quantity demanded increases from 20 units to 30 units, which of the following is true

the demand is inelastic

the price elasticity of demand is 1

demand is unit elastic

the price is perfectly elastic

the price elasticity of demand is -1

Answer 1

If the price deceases from $10 to $5 and the quantity demanded increases from 20 units to 30 units, then the elasticity of demand is:

$Ed = \frac {30-20} {5-10} × \frac {5+10} {30+20} = -0.6,$

so the correct answer is "the demand is inelastic".