If the elasticity of demand is 3,and the price rises by 15 percent,then
A)The quantity demanded will increase by 5 percent.
B)The quantity demanded will fall by 45 percent.
C)The quantity demanded will rise by 4.5 percent.

Question

Quizplus · Accepted Answer

The formula for calculating the percentage change in quantity demanded is:

Percentage change in quantity demanded = Elasticity of demand * Percentage change in price

Substituting the given values:

Percentage change in quantity demanded = 3 * 15
Percentage change in quantity demanded = 45

Therefore, the quantity demanded will fall by 45 percent.

If the Elasticity of Demand Is 3,and the Price Rises