Question

As the price of good X decreasesfrom $10to $8, quantity demanded increasesfrom 10to 13.Based upon this information we canconclude that the demand for X is

A. inelastic.
B. elastic.
C. insufficient information for judgment.
D. unit elastic.

Answer 1

Answer: B- Elastic

Explanation: The elasticity of demand can be perfectly elastic or relatively elastic.

The above information given is a relatively elastic demand because the change in price gives rise to a proportionate change (increase) in demand for the product.