The elasticity of demand for a good is -0.75. A 4 percentincrease in price will cause a:
A)3 percent decrease in quantity demanded.(True Answer )Correct
B)5.33 percent increase in quantity demanded.
C)5.33 percent decrease in quantity demanded.
D)0.19 percent decrease in quantity demanded.

Question

Quizplus · Accepted Answer

The elasticity of demand is -0.75 which means that for a 1% increase in price, quantity demanded will decrease by 0.75%. Therefore, a 4% increase in price will lead to a 3% decrease in quantity demanded (0.75 x 4). The correct answer is A.

The Elasticity of Demand for a Good Is -0