The price elasticity of demand for furniture is estimated at 1.3. This value means a one per cent increase in the
A) quantity of furniture demanded will decrease the price of furniture by 1.3 per cent.
B) price of furniture will increase the quantity of furniture demanded by 1.3 per cent.
C) price of furniture will decrease the quantity of furniture demanded by 1.3 per cent.
D) quantity of furniture demanded will increase the price of furniture by 1.3 per cent.

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, with a positive value indicating the direction of change. A value of 1.3 means that for a 1% increase in price, the quantity demanded decreases by 1.3%.

The Price Elasticity of Demand for Furniture Is Estimated at 1.3