If the price elasticity of demand for a product is equal to 0.5, then a 10 a percent decrease in price will increase quantity demand by

If the price elasticity of demand for a product is equal to 0.5, then a 10 a percent decrease in price will increase quantity demand by

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Answer

• Increase quantity demanded by 5 percent
  Explanation:
  If the price elasticity of demand for a product is equal to 0.5, then a 10 a percent decrease in price will increase quantity demand by
  Price Elasticity of Demand = % change in quantity / % change in price
  0.5 = %Q / -10%
  %Q = 10% * 0.5
  %Q = 5%
  Percentage change in Quantity would be an increase by 5%.
  It is an increase because of negative relationship between price and quantity demanded, so when price decrease by 10 percent, quantity demanded will increase by 5%

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