Multiple choice

If the price of X rises by 10 per cent and the quantity demanded falls by 10 per cent, X has

  1. inelastic demand

  2. unit elastic demand

  3. zero elastic demand

  4. elastic demand
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When percentage change in quantity demanded equals percentage change in price in absolute terms, elasticity = 1, which is unit elastic. Here, both changes are 10%, so elasticity = |-10/10| = 1. Inelastic would be < 1, elastic would be > 1, zero elastic means perfectly inelastic.

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