A pizza restaurant raises the price of their pizza by 10%. As a result, they witness a 20% decrease in the quantity demand of their pizza. What is the price elasticity of demand for this pizza restaurant? O-25 0-2 O-0.5 O-10

A pizza restaurant raises the price of their pizza by 10%. As a result, they witness a 20% decrease in the quantity demand of their pizza. What is the price elasticity of demand for this pizza restaurant? O-25 0-2 O-0.5 O-10

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter5: Price Elasticity Of Demand And Supply

Section5.3: Determinants Of Price Elasticity Of Demand

Problem 1YTE: According to the previous discussion, what factors influence the price elasticity of demand for...

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Expert Solution

Introduction

Price elasticity of demand: It measures the percentage change in the quantity demanded for a 1% increase in the price level. If the absolute value of the elasticity of demand is greater than 1, we say the demand is elastic. Whereas if the absolute value of the elasticity of demand is lesser than 1, we say the demand is inelastic.

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