If a 50 Percent Increase in the Price of Hula

Multiple Choice

If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand is

A) 5 and the demand for hula hoops is elastic.
B) 0.2 and the demand for hula hoops is elastic.
C) 5 and the demand for hula hoops is inelastic.
D) 0.2 and the demand for hula hoops is inelastic.