If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 percent increase in football 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.

Question

Quizplus · Accepted Answer

The price elasticity of demand (PED) formula states that PED = (% change in quantity demanded) / (% change in price). Given that the elasticity is 4.5, a 10% increase in price would result in a (% change in quantity demanded) of -45% (since PED is negative in this case). Therefore, the expected decrease in quantity demanded would be 45%, as stated in option C.

If the Price Elasticity of Demand for Football Tickets Is