For product X,the price elasticity of demand has an absolute value of 3.5.This means that quantity demanded will increase by
A)1 percent for each 3.5 percent decrease in price,ceteris paribus.
B)1 unit for each $3.50 decrease in price,ceteris paribus.
C)3.5 percent for each 1 percent decrease in price,ceteris paribus.
D)3.5 units for each $1 decrease in price,ceteris paribus.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. In this case, with an absolute value of 3.5, it means that for every 1% decrease in price, quantity demanded will increase by 3.5%. Therefore, choice C is the correct answer.

For Product X,the Price Elasticity of Demand Has an Absolute