If the price elasticity of earbud headphones is -0.3 and price increases 20%,what happens to the quantity of earbud headphones demanded?
A)quantity decreases by 26%
B)quantity decreases by 6%
C)quantity increases by 15%
D)quantity increases by 21%

Question

Quizplus · Accepted Answer

Using the formula, we can calculate the % change in quantity demanded as: % change in quantity = (F1F1F1S1F1F1F100.3) x (-20)
% change in quantity = 0.3 x (-20) = -6%
Since the % change in quantity is negative, it means that quantity demanded decreases. Therefore, the correct choice is B, which states that quantity decreases by 6%.

If the Price Elasticity of Earbud Headphones Is -0