If the price elasticity of demand for opera tickets is estimated to be 4.5, then a 10 percent increase in opera ticket prices would be expected to cause a
A) 4.5 percent decrease in quantity demanded.
B) 4.5 percent increase in quantity demanded.
C) 45 percent decrease in quantity demanded.
D) 45 percent increase in quantity demanded.
E) 450 percent increase in quantity demanded

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 4.5, a 10% increase in price would lead to a 45% decrease in quantity demanded (4.5 * 10% = 45%).

If the Price Elasticity of Demand for Opera Tickets Is