Answered

If the price of a product goes down by 10% and the quantity demanded goes up by 20%, the product is:

A. elastic
B. inelastic
C. cheap
D. an inferior good

Please select the best answer from the choices provided:
A
B
C
D



Answer :

GinnyAnswer

Final answer:

When price decreases by 10% and quantity demanded increases by 20%, the product is considered elastic due to the greater proportional change in quantity demanded compared to the price change.


Explanation:

Elastic. Goods that are price elastic have substitutes available, and the percentage change in quantity demanded will decrease more than the percentage increase in price (|Ed|>1).

For example, if a 10% price decrease leads to a 20% quantity demanded increase, the elasticity value would be -20%/10% = -2, indicating elastic demand.


Learn more about Price Elasticity of Demand here:

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