When the price of a good increased by 10 percent, the quantity demanded of it decreased 2 percent. Is the demand for this good elastic, unit elastic, or inelastic? Demand for this good is __ A. inelastic B. unit elastic C. elastic

To determine whether the demand for this good is elastic, unit elastic, or inelastic, we need to calculate the price elasticity of demand (PED). The formula for PED is:<br /><br />\[ \text{PED} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}} \]<br /><br />Given:<br />- The price increased by 10 percent (\(\% \text{ change in price} = 10\%\))<br />- The quantity demanded decreased by 2 percent (\(\% \text{ change in quantity demanded} = -2\%\))<br /><br />Now, plug these values into the formula:<br /><br />\[ \text{PED} = \frac{-2\%}{10\%} = -0.2 \]<br /><br />The price elasticity of demand (PED) is -0.2. To interpret this value:<br />- If \(|\text{PED}| > 1\), demand is elastic.<br />- If \(|\text{PED}| = 1\), demand is unit elastic.<br />- If \(|\text{PED}| < 1\), demand is inelastic.<br /><br />Since \(|-0.2| < 1\), the demand for this good is inelastic.<br /><br />Therefore, the correct answer is:<br /><br />A. inelastic