If a 9 percent increase in price for a good results in an 8 percent decrease in quantity demanded, the price elasticity of demand is

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Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which in this case is -8% / 9% = -0.89. The negative sign indicates the inverse relationship between price and quantity demanded, but the magnitude (0.89) is what's typically reported.

If a 9 Percent Increase in Price for a Good