Asked by Michelle Tseng on Apr 26, 2024
Verified
The price elasticity of demand for health care is 0.2. This means that a 5 percent increase in price will induce a
A) 10 percent decrease in quantity demanded.
B) 5 percent decrease in quantity demanded.
C) 2.5 percent decrease in quantity demanded.
D) 1 percent decrease in quantity demanded.
Price Elasticity
A metric revealing how demand for a good varies in response to price changes.
Quantity Demanded
The total amount of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.
- Acquire knowledge on how price elasticity influences the demand for health care.
Verified Answer
JE
Jamie EllenApr 27, 2024
Final Answer :
D
Explanation :
The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 0.2, a 5 percent increase in price leads to a 1 percent decrease in quantity demanded (0.2 * 5% = 1%).
Learning Objectives
- Acquire knowledge on how price elasticity influences the demand for health care.