Suppose the value of the price elasticity of demand is -3.This means that________.
A)A 1 per cent increase in the price of the good causes quantity demanded to increase by 3 per cent.
B)A 1 per cent increase in the price of the good causes quantity demanded to decrease by 3 per cent.
C)A 3 per cent increase in the price of the good causes quantity demanded to decrease by 1 per cent.
D)A $1 increase in price causes quantity demanded to fall by 3 units.

Question

Quizplus · Accepted Answer

A negative value for the price elasticity of demand indicates an inverse relationship between price and quantity demanded. A magnitude of 3 indicates that for every 1% increase in price, quantity demanded will decrease by 3%.

Suppose the Value of the Price Elasticity of Demand Is