The price elasticity of demand for Best Paints one gallon sized paint cans is 0.79. If Best Paints increased the price of their gallon sized paint cans by 10 percent, which of the following is expected to occur?
A)The quantity demanded will increase by 0.79 percent.
B)The quantity demanded will fall by 7.9 percent.
C)The quantity demanded will increase by 7.9 percent.
D)The quantity demanded will fall by 0.79 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. A price elasticity of 0.79 means that for every 1% increase in price, the quantity demanded will fall by 0.79%. Therefore, a 10% increase in price would lead to a 7.9% decrease in quantity demanded.

The Price Elasticity of Demand for Best Paints One Gallon