Asked by Lauren Hills on Sep 23, 2024
Verified
Given that the own-price elasticity of demand for a brand of shoes is -2,if the price rises by 8%,what will happen to the quantity of shoes demanded?
A) It will decrease by 16%
B) It will increase by 16%
C) It will decrease by 1.6%
D) It will decrease by 1.6%
Own-price Elasticity
A measure of how sensitive the quantity demanded of a good is to a change in its own price, reflecting the responsiveness of demand to price changes.
Quantity Demanded
The quantity of a product that buyers are ready and capable of buying at a specific price.
Shoes
Footwear items designed to protect and provide comfort to the human foot while performing various activities.
- Calculate the own-price elasticity of demand and understand its implications.
Verified Answer
DA
David Alfonso4 days ago
Final Answer :
A
Explanation :
The own-price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. Given an elasticity of -2 and a price increase of 8%, the quantity demanded will decrease by 16% (-2 * 8% = -16%).
Learning Objectives
- Calculate the own-price elasticity of demand and understand its implications.