If price increases by 10 percent and quantity demanded decreases by 15 percent demand is
unit elastic inelastic elastic

Question

If price increases by 10 percent and quantity demanded decreases by 15 percent, demand is
unit elastic, inelastic, elastic

Nepoli · Answer

To determine whether demand is elastic, inelastic, or unit elastic, we can use the price elasticity of demand (PED) formula:

$Price elasticity of demand = \frac{Percentage change in quantity demanded}{Percentage change in price}$

Given:

Percentage change in price = 10%
Percentage change in quantity demanded = -15% (since quantity demanded decreases)

Now, calculate the price elasticity of demand:

$PED = \frac{- 15 %}{10 %} = - 1.5$

In this case, since the absolute value of the price elasticity of demand is 1.5 (which is greater than 1), demand is elastic.

Demand is elastic.

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