Final answer:
The percentage change in quantity demanded (50%) is greater than the percentage increase in price (20%), leading to a price elasticity of demand of 2.5, which indicates that demand is elastic.
Step-by-step explanation:
If the price of a product rises from $50 to $60, resulting in the per-period quantity demanded decreasing from 20 to 10 units, we can assess the price elasticity of demand to understand the relationship between price changes and quantity demanded. A key concept in economics is that the price elasticity of demand measures consumers' responsiveness to price changes. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Applying this to the figures provided, we see that the price has increased by 20% ($10 increase from an original price of $50), while the quantity demanded has decreased by 50% (10 units decrease from an original demand of 20 units). Thus, the price elasticity of demand in this scenario is the percentage change in quantity demanded (50%) divided by the percentage change in price (20%), which equals 2.5.
Since the value of price elasticity of demand in this case is greater than 1, it demonstrates that the demand is elastic. This is because the percentage decrease in quantity demanded (50%) is greater than the percentage increase in price (20%). Therefore, among the choices given, it may be concluded that over this price range, demand is elastic.