Multiple Choice
The price of a new toy increases from $5 to $7 and the quantity demanded decreases from 12,000 to 6,000 per month as a result. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:
A) 0.5, indicating relatively elastic demand.
B) 0.5, indicating relatively inelastic demand.
C) 2.0, indicating relatively elastic demand.
D) 2.0, indicating relatively inelastic demand.
Correct Answer:
Verified
Correct Answer:
Verified
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