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If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is:_______.
a. perfectly elastic.
b. relatively elastic.
c. relatively inelastic.
d. unit elastic.

Answer :

Answer:

The correct answer is option b.

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the commodity.  

It calculated by measuring the ratio of the percentage change in quantity demanded and percentage change in price.

Price elasticity for golf balls

= [tex]\frac{\% \Delta Qd}{\% \Delta P}[/tex]

= [tex]\frac{42}{35}[/tex]

= 1.2

Here, the value of price elasticity is 1.2. The price elasticity is greater than 1 means that the demand for a commodity is relatively elastic. A proportionate change in price causes more than proportionate change in quantity demanded.

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