The price of milk at the local grocery store is cut by 15%, and the quantity of milk demanded increases by 10% in response. What is the absolute value of the price elasticity of demand for milk?
A)1.5
B)-1.5
C)0.67
D)-0.67

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. Here, it is 10% / 15% = 0.67. The absolute value is 0.67.

The Price of Milk at the Local Grocery Store Is