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CMA 1294 1-19, If a product has a price elasticity of demand of 2.0, how will be the demand?

A - Perfectly elastic. B - Perfectly inelastic. C - Elastic. D - Inelastic.

Accounting Auditing Peachtree
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Question added by محمد الباجوري , Senior ERP Consultant & ERP Project Manager , XERVON GmbH
Date Posted: 2013/06/25
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Animesh Awasthy
by Animesh Awasthy , Assistant Manager , HDFC Bank Ltd.

A

Jay Fresnido
by Jay Fresnido , Total Rewards Analyst (Assistant Manager Level) , Al Futtaim Group

Answer (C - Elastic) is correct.
The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.
If the elasticity coefficient is greater than one, demand is elastic.
Hence, an elasticity of2.0 is elastic.

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