If the Value of the Price Elasticity of Demand Is

Multiple Choice

If the value of the price elasticity of demand is 0.2, this means that:

A) a 20 percent decrease in price causes a 1 percent increase in quantity demanded.
B) a 0.2 percent decrease in price causes a 1 percent increase in quantity demanded.
C) a 5 percent decrease in price causes a 1 percent increase in quantity demanded.
D) a 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded.
E) a 100 percent decrease in price causes a 200 percent increase in quantity demanded.