The own-price elasticity of demand for apples is -1.2.If the price of apples falls by 5%, what will happen to the quantity of apples demanded?
A)It will increase 5%.
B)It will fall 4.3%.
C)It will increase 4.2%.
D)It will increase 6%.

Question

Quizplus · Accepted Answer

The own-price elasticity of demand is -1.2, which means a 1% decrease in price leads to a 1.2% increase in quantity demanded. A 5% decrease in price will increase the quantity demanded by 5% * 1.2 = 6%.

The Own-Price Elasticity of Demand for Apples Is -1