PIPFA Intermediate Practice Questions - PIPFA Intermediate Level Examination Exam

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If a 10% increase in the price of a commodity leads to a 20% decrease in its quantity demanded, what is the price elasticity of demand?

Elasticity is -0.5, meaning demand is inelastic Elasticity is 0.0, meaning demand is perfectly inelastic Elasticity is -1.0, meaning demand is unitary elastic Elasticity is -2.0, meaning demand is elastic

Correct Answer:

Elasticity is -2.0, meaning demand is elastic

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