If a 10 rise in price causes a 5 decrease in th... - JAMB Economics 2014 Question
If a 10% rise in price causes a 5% decrease in the quantity demanded of a commodity, the elasticity of demand is
A
unitary elastic
B
zero elastic
C
elastic
D
inelastic
correct option: c
In economics, the Total Revenue Test is a means for determining whether demand is elastic or inelastic. If an increase in price causes an increase in total revenue, then demand can be said to be inelastic, since the increase in price does not have a large impact on quantity demanded. If an increase in price causes a decrease in total revenue, then demand can be said to be elastic, since the increase in price has a large impact on quantity demanded.
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