The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef, holding every thing else constant, will cause the quantity of beef demanded to
A)decrease by 12 percent.
B)decrease by 26 percent.
C)decrease by 32 percent.
D)decrease by 60 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is: percentage change in quantity demanded / percentage change in price. With an elasticity of 0.60, a 20% increase in price will lead to a 12% decrease in quantity demanded (0.60 * 20% = 12%).

The Price Elasticity of Demand for Beef Is Estimated to Be