Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 5 - Elasticity: A Measure of Responsiveness - Exercises - 5.1 The Price Elasticity of Demand - Page 121: 1.3

Answer

2 elastic

Work Step by Step

The percent change in quantity is $p=\frac{100-80}{100}\times100=\frac{20}{100}\times100=20$ The percent change in price is $p=\frac{11-10}{10}\times100=\frac{1}{10}\times100=10$ The elasticity of demand is $E_{d}=\frac{20}{10}=2$ Since $E_d\gt1$ the demand is elastic.
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