Final answer:
A 1 percent increase in price will result in a 2.5 percent decrease in the quantity demanded for a good with a price elasticity of demand of -2.5, indicating that the demand for the product is elastic.
Step-by-step explanation:
Considering the market demand for a given good, if the price elasticity of demand (ED) is -2.5 at the current market price, then a 1 percent increase in price will lead to a 2.5 percent decrease in the quantity demanded. This is because the price elasticity of demand measures the responsiveness of quantity demanded to a change in price, with the negative sign indicating the inverse relationship. Therefore, a 1 percent increase in price results in a 2.5 percent reduction in quantity demanded, reflecting an elastic demand where quantity demanded is quite responsive to price changes.