Which accurately provides an example of demand elasticity?

A. As the price of gasoline increases by 5 percent, the demand for gasoline remains constant.
B. As the price of bananas decreases by 10 percent, the demand for bananas decreases by 10 percent.
C. As the price of penicillin decreases by 30 percent, the demand for penicillin remains constant.
D. As the price of video games decreases by 20 percent, the demand for video games increases by 30 percent.



Answer :

Final answer:

Explanation of demand elasticity with examples of inelastic and elastic scenarios.


Explanation:

An example of demand elasticity is when the price of a product changes, causing a more substantial change in the quantity demanded. Specifically, when the percentage change in demand exceeds the percentage change in price, it is considered elastic.

In the given options:

  • As the price of gasoline increases by 5 percent, and the demand remains constant, this is inelastic demand.
  • As the price of bananas decreases by 10 percent, and the demand decreases by 10 percent, this represents an elastic demand scenario.
  • As the price of penicillin decreases by 30 percent, and the demand remains constant, this implies an inelastic demand.

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