单选题 The price of product Z decreased from $ 2.50 per unit to $ 2.00 per unit. Since the price decreased, demand has gone up from 3 million units to 4 million units. Calculate the price elasticity of demand and determine if the demand is elastic or inelastic.

【正确答案】 C

【答案解析】percentage change in quantity =(4-3)/[(4+3)/21=0.286=28.6% percentage change in price =(2-2.5)/[(2+2.5)/2]=-0.222=-22.2% 28.6%/-22.2%=-1.29 Since the price elasticity of demand is greater than 1 ( ignore the sign) , product Z is elastic.