Suppose the price elasticity of demand for beef is about 1.2. Other things equal, this means that a 15 percent increase in the price of beef will cause the quantity of beef demanded to
A)increase by approximately 8 percent.
B)decrease by approximately 18 percent.
C)decrease by approximately 8 percent.
D)decrease by approximately 12 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. Given an elasticity of 1.2 and a 15% increase in price, the quantity demanded will decrease by 1.2 * 15% = 18%.

Suppose the Price Elasticity of Demand for Beef Is About