21、A company has determined that the quantity of that company's product demanded increases by 10% when price is reduced by 5%. That company's elasticity of demand is best described as:

A. unitary elastic.

B. perfectly elastic.

C. relatively elastic

D. perfectly inelastic.

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21、A company has determined that the quantity of that company's product demanded increases by 10% when price is reduced by 5%. That company's elasticity of demand is best described as:

A. unitary elastic.

B. perfectly elastic.

C. relatively elastic

D. perfectly inelastic.

  
Correct answer = C

"Elasticity," Michael Parkin
2008 Modular Level I, Vol. 2, pp. 10-12
Study Session 4-13-a
calculate and interpret the elasticities of demand (price elasticity, cross elasticity, income elasticity) and the elasticity of supply, and discuss the factors that influence each measure
Demand is relatively elastic, since the absolute value of the elasticity coefficient is greater than unity (10 / -5 = -2). Total revenues will expand.