Asked by Oriana Gallardo on Jun 16, 2024
Verified
If the price elasticity of demand for a product is equal to 0.5, then a decrease in price of 10 percent will increase quantity demanded by
A) 20 percent.
B) 0.5 percent.
C) 5 percent.
D) 0.05 percent.
Percentage Change
A mathematical calculation that describes the degree of change over time, expressed as a fraction of the starting value.
- Familiarize yourself with the notion of price elasticity of demand and the steps involved in its calculation.
Verified Answer
JE
Justin EnemuoJun 19, 2024
Final Answer :
C
Explanation :
If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will result in a 5 percent increase in quantity demanded. This is because a 0.5 price elasticity of demand means that for every 1 percent change in price, there is a 0.5 percent change in quantity demanded. Therefore, a 10 percent decrease in price will result in a 5 percent increase in quantity demanded.
Learning Objectives
- Familiarize yourself with the notion of price elasticity of demand and the steps involved in its calculation.