单选题 A company has determined that the quantity of that company's product demanded increases by 5 percent when price is reduced by 10 percent. That company's elasticity demand is best described as:

A、

A. unitary elastic.
B、

B. perfectly elastic.
C、

C. relatively inelastic.

【正确答案】 C

【答案解析】If a small percentage price change results in a large percentage change in quantity demanded, the demand for that good is said to be highly elastic. Apples are an example of an elastic good. The absolute value of price elasticity is greater than one, meaning that the percentage change in Q is greater than the percentage change in P. If a large percentage price change results in a small percentage change in quantity demanded, demand is relatively inelastic. Gasoline is an example of a relatively inelastic good. The absolute value of price elasticity is less than one, meaning that the percentage change in Q is less than the percentage change in P. A perfectly elastic demand curve is horizontal, and its elasticity is infinite. If the price increases, quantity demanded goes to zero.