Suppose the own-price elasticity of demand for good X is -0.5, and that the price of good X increases by 10%.We would expect the quantity demanded of good X to
A)increase by 5%.
B)increase by 20%.
C)decrease by 5%.
D)decrease by 20%.

Question

Quizplus · Accepted Answer

The own-price elasticity of demand is -0.5, meaning that for a 1% increase in price, the quantity demanded decreases by 0.5%. Therefore, a 10% increase in price would lead to a 5% decrease in quantity demanded.

Suppose the Own-Price Elasticity of Demand for Good X Is