If the price elasticity of demand is 3 then this means that a one-percentage increase in quantity demanded will cause a three-percentage decrease in the price of the good.

Question

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The price elasticity of demand of 3 means that a 1% decrease in price will cause a 3% increase in quantity demanded. This is because the demand for the good is relatively elastic, meaning that a small change in price will cause a larger change in quantity demanded.

If the Price Elasticity of Demand Is 3 Then This