Asked by M'Kayla McGee on Apr 24, 2024
Verified
If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a
A) 0.50 percent decrease in the quantity demanded.
B) 2.00 percent decrease in the quantity demanded.
C) 50.00 percent decrease in the quantity demanded.
D) 100.00 percent decrease in the quantity demanded.
Price Elasticity
An indicator of the sensitivity of the demand for a product to fluctuations in its price, represented by the percentage change.
Quantity Demanded
The specific amount of a product that buyers are willing to purchase at a given price, holding all other factors constant.
- Scrutinize the effect that price variation has on the amount of demand by applying the elasticity notion.
- Determine the relationship between price elasticity and total revenue.
Verified Answer
JT
jocelyn torralba8 days ago
Final Answer :
C
Explanation :
The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 5, a 10 percent increase in price leads to a 50 percent (5 * 10%) decrease in quantity demanded.
Learning Objectives
- Scrutinize the effect that price variation has on the amount of demand by applying the elasticity notion.
- Determine the relationship between price elasticity and total revenue.