If the price elasticity of demand for some good is 2.7,a 10% increase in the price results in
A)a 2.7% decrease in the quantity demanded.
B)a 2.7% increase in the quantity demanded.
C)a 27% increase in the quantity demanded.
D)a 27% decrease in the quantity demanded.
E)There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

The price elasticity of demand tells us the percentage change in quantity demanded in response to a percentage change in price. In this case, since the price elasticity is 2.7, a 10% increase in price should result in a 27% decrease in quantity demanded. Therefore, choice D is the correct answer.

If the Price Elasticity of Demand for Some Good Is