The price elasticity of demand for a given good is 2.3. This implies that if price
A)rises by 10 percent, quantity demanded falls 2.3 percent.
B)rises by 2.3 percent, quantity demanded falls 2.3 percent.
C)rises by 20 percent, quantity demanded falls 46 percent.
D)falls by 10 percent, quantity demanded falls 2.3 percent.

Question

Quizplus · Accepted Answer

Price elasticity of demand of 2.3 means that for every 1% increase in price, quantity demanded decreases by 2.3%. Thus, a 20% price increase leads to a 46% decrease in quantity demanded (20% * 2.3 = 46%).

The Price Elasticity of Demand for a Given Good Is