Answer:
Demand is elastic.
Explanation:
The price of hand calculators falls from $10 to $9.
The quantity demanded increases from 100 to 125.
The price elasticity of demand is the measure of the degree of responsiveness of quantity demanded to a change in price.
The price elasticity of demand
= [tex]\frac{\Delta Q}{\Delta P}[/tex]
= [tex]\frac{\frac{125-100}{100} }{\frac{9-10}{10} }[/tex]
= [tex]\frac{0.25}{-0.1}[/tex]
= -2.5
The price elastcity of demand is more than 1, this implies that the demand is elastic.
