Which of the following is true of a good that has a price elasticity of demand of −3?
A) If the income of a consumer increases by 3 percent, the quantity demanded of the good will increase by 1 percent.
B) If the income of a consumer increases by 1 percent, the quantity demanded of the good will increase by 3 percent.
C) If the price of the good increases by 1 percent, the quantity demanded of the good will decrease by 3 percent.
D) If the price of the good increases by 3 percent, the quantity demanded of the good will increase by 1 percent.

Question

Quizplus · Accepted Answer

A price elasticity of demand of −3 means that a 1 percent increase in price will result in a 3 percent decrease in quantity demanded. This is the definition of price elasticity of demand. None of the answer choices relate to this definition except for option C, which correctly describes the relationship between price and quantity demanded.

Which of the Following Is True of a Good That