Use the following information to answer questions
$$\begin{array} { | c | c | }
\hline & \begin{array} { c }
\text { Price Elasticity of } \
\text { Dernard }
\end{array} \
\hline \text { Good A } & 4.5 \
\hline \text { Good B } & .45 \
\hline \text { Good C } & .45 \
\hline \text { Good D } & 45 \
\hline
\end{array}$$
-If the price elasticity of demand for a product is equal to 0.7, then a 5 percent increase in price will
A)Increase quantity demand by .035%
B)Increase quantity demanded by 3.5%
C)Decrease quantity demanded by .035%
D)Decrease quantity demanded by 3.5%

Question

Use the following information to answer questions 
 $$\begin{array} { | c | c | } 
\hline & \begin{array} { c } 
\text { Price Elasticity of } \
\text { Dernard }
\end{array} \
\hline \text { Good A } & 4.5 \
\hline \text { Good B } & .45 \
\hline \text { Good C } & .45 \
\hline \text { Good D } & 45 \
\hline
\end{array}$$
-If the price elasticity of demand for a product is equal to 0.7, then a 5 percent increase in price will
A)Increase quantity demand by .035%
B)Increase quantity demanded by 3.5%
C)Decrease quantity demanded by .035%
D)Decrease quantity demanded by 3.5%

Quizplus · Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. A price elasticity of 0.7 means that for a 1% increase in price, the quantity demanded will decrease by 0.7%. Therefore, a 5% increase in price will decrease quantity demanded by 3.5% (0.7 * 5).

Use the Following Information to Answer Questions -If the Price Elasticity of Demand for a Product Is