If a 10% change in price causes only a 5% change in sales, the elasticity coefficient will be only 1/2. economists would say in this case that demand is

a. elastic
b. static
c. inelastic
d. stable

the answer is c

Economists would say in this case that demand is C. INELASTIC

Given:
10% change in price causes only a 5% change in sales, the elasticity coefficient will be only 1/2

elasticity coefficient =  (percentage change in quantity) / (percentage change in price)

elasticity coefficient = 5% / 10% = 1/2

If the elasticity coefficient is less than 1, demand is inelastic.
If the elasticity coefficient is more than 1, demand is elastic.

 

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