In the price range from $8 to $6, the demand is price elastic.

In the price range from $8 to $6, the demand is price elastic.

• A. Unit elastic
• B. Inelastic
• C. Cannot determine
• D. Elastic

Answer: (D)

Price elasticity of demand measures how much quantity demanded responds to a price change. If the demand is elastic over a price range, the percentage change in quantity demanded is greater than the percentage change in price. Here, the price falls from $8 to $6, a 25% drop. Because the range is elastic, the quantity demanded must rise by more than 25%, so the elasticity is greater than 1. That’s why the range is described as price elastic. If it were unit elastic, the quantity would rise by exactly 25%; if inelastic, it would rise by less than 25%.

Price elasticity of demand measures how much quantity demanded responds to a price change. If the demand is elastic over a price range, the percentage change in quantity demanded is greater than the percentage change in price. Here, the price falls from $8 to $6, a 25% drop. Because the range is elastic, the quantity demanded must rise by more than 25%, so the elasticity is greater than 1. That’s why the range is described as price elastic. If it were unit elastic, the quantity would rise by exactly 25%; if inelastic, it would rise by less than 25%.