Asked by Bailey Hasler on Apr 25, 2024
Verified
The elasticity of demand for fish is estimated to be 3.If this estimate is accurate,then a 3% rise in price will
A) increase quantity demanded by 1%.
B) increase quantity demanded by 9%.
C) decrease quantity demanded by 1%.
D) decrease quantity demanded by 3%.
E) decrease quantity demanded by 9%.
Elasticity of Demand
A measure of how much the quantity demanded of a good responds to a change in its price.
Quantity Demanded
The sum total of a particular good or service that individuals are inclined and financially able to purchase at a given price.
Decrease
A reduction in size, number, or amount.
- Comprehend the principle of price elasticity of demand and the method of its calculation.
Verified Answer
CA
Carlos Almagro8 days ago
Final Answer :
E
Explanation :
The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 3, a 3% rise in price would lead to a 9% decrease in quantity demanded (3 times 3%), hence option E is correct.
Learning Objectives
- Comprehend the principle of price elasticity of demand and the method of its calculation.