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If a 20 percent increase in the price of red bull energy drinks results in a decrease in the quantity demanded of 25 percent, the price elasticity of demand for those drinks is _____ elastic/inelastic
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If a 20 percent increase in the price of red bull energy drinks results in a decrease in the quantity demanded of 25 percent, the price elasticity of demand for those drinks is _____ elastic/inelastic

User Anne Porosoff
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The correct answer is that the price elasticity of demand is elastic.

Price elasticity occurs when a change in price results in a change in demand. In this example, a 20 percent increase in the price of the drinks resulted in a 25 percent decrease in the demand for the product. Because the price increase resulted in a demand decrease the price is elastic.

User Jlapoutre
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