If a 10% increase in price causes a 5% decrease in quantity demanded, the price elasticity of demand is:

January 19, 2025 by Hamid

A) 0.2

B) 0.5

C) 2.0

D) 5.0

For Explanation Click Here:

Price elasticity of demand (PED) = % change in quantity demanded / % change in price.

Here, PED = -5% / 10% = -0.5 (take the absolute value as elasticity is usually reported as positive).