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

Question

Quizplus · Accepted Answer

A price elasticity of demand of 2.7 means that a 1% increase in price results in a 2.7% decrease in quantity demanded. Therefore, a 10% increase in price would result in a 27% decrease in quantity demanded (10% * 2.7 = 27%).

If the Price Elasticity of Demand for Some Good Is