CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

A company determines that the quantity demanded of a product increases by 5% when price is reduced by 10%. The product's price elasticity of demand is best described as ______.
A. elastic
B. inelastic
C. perfectly elastic
Explanation: When the price elasticity of demand is between 0 and 1, the good is said to have an inelastic demand. In this case, the price elasticity of demand is calculated as 5% / 10% = 0.5.

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