The demand for this product is B. Elastic in nature.
If the price elasticity of demand is:
- Less than 1, a good is said to be inelastic.
- More than 1, good is elastic
- Equal to 1, good is unit elastic
The price elasticity of demand is calculated by the formula:
= Change in quantity demanded / Change in price
= 10% / 5%
= 2
Price elasticity of demand is more than 1 so we can conclude that the product is elastic.
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Options for this question include:
A. Inelastic
B. Elastic
C. Unit elastic
