Because of an increase in the price of leather, the price of a pair of women's dress shoes increased by 12 per cent. If the price elasticity of demand for women's dress shoes is 0.85, which of the following will happen?
A) The number of pairs of women's dress shoes demanded will decrease by 10.2 per cent.
B) Total expenditure on women's dress shoes will decrease.
C) Total revenue from the sale of women's dress shoes will decrease.
D) None of the above

Question

Quizplus · Accepted Answer

The percentage change in quantity demanded is calculated by multiplying the price elasticity of demand by the percentage change in price. Here, 0.85 * 12% = 10.2%, indicating a 10.2% decrease in the quantity demanded.

Because of an Increase in the Price of Leather, the Price