A Value of the Absolute Price Elasticity of Demand Equal

Multiple Choice

A value of the absolute price elasticity of demand equal to 2.5 indicates that

A) a 5% decrease in price leads to a 2% increase in quantity demanded.
B) a 2% decrease in price leads to a 25% increase in quantity demanded.
C) a 1% decrease in price leads to a 2.5% increase in quantity demanded.
D) a 0.25% decrease in price leads to a 1% increase in quantity.