Which of the following is an example of price elasticity of demand? A. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. B. Banana farmers enjoyed higher prices when the demand for bananas increased. C. When the price of bananas increased by 5 percent and incomes slumped, banana sales decreased by 5 percent. D. Richer people buy fewer bananas than poorer people.

The correct answer is A. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent.<br /><br />Price elasticity of demand refers to the responsiveness of the quantity demanded of a good or service to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.<br /><br />In option A, when the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. This indicates that the demand for bananas is elastic, as the percentage change in quantity demanded (2 percent) is less than the percentage change in price (5 percent).<br /><br />Option B is not an example of price elasticity of demand as it refers to the effect of an increase in demand on prices, not the responsiveness of quantity demanded to a change in price.<br /><br />Option C is not an example of price elasticity of demand as it involves a change in both price and incomes, making it difficult to isolate the effect of price on quantity demanded.<br /><br />Option D is not an example of price elasticity of demand as it refers to the purchasing behavior of different income groups, not the responsiveness of quantity demanded to a change in price.