If the price elasticity of demand is 4 than
A)A 1 percent change in the good's price will cause a 4 percent decrease in the quantity demanded of the good.
B)A 1 percent change in the good's price will cause a 4 percent increase in the quantity demanded of the good.
C)A 10 percent change in the good's price will cause a 4 percent decrease in the quantity demanded of the good
D)A 10 percent change in the good's price will cause a 4 percent increase in the quantity demanded of the good.

Question

Quizplus · Accepted Answer

Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. If the price elasticity of demand is 4, it means that a 1 percent change in the price will result in a 4 percent change in quantity demanded in the opposite direction (i.e. if the price increases by 1%, the quantity demanded will decrease by 4%). Therefore, option A is the correct answer.

If the Price Elasticity of Demand Is 4 Than