The price elasticity of demand for widgets is 0.8. Assuming no change in the demand curve for widgets, an increase in sales of 16 percent implies a(n)

A) 1 percent reduction in price.
B) 12 percent reduction in price.
C) 20 percent reduction in price.
D) 40 percent reduction in price.

Price Elasticity of Demand

Price Elasticity of Demand quantifies how the quantity demanded of a good or service changes in response to a change in its price, highlighting consumer sensitivity to price changes.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at those prices.

Widgets

A generic term for an unspecified, hypothetical product used in economic and business analysis.