Taco Bell's economists determine that the price elasticity of demand for their tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the quantity demanded will decrease by ________ percent.
A) 2.0
B) 3.0
C) 6.0
D) 12.0

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 2.0, a 6.0 percent increase in price will lead to a 12.0 percent decrease in quantity demanded (2.0 * 6.0 = 12.0).

Taco Bell's Economists Determine That the Price Elasticity of Demand