If the price elasticity of demand for Cheer detergent is 3.0,then a
A)12 percent drop in price leads to a 36 percent rise in the quantity demanded
B)12 percent drop in price leads to a 4 percent rise in the quantity demanded
C)$1,000 drop in price leads to a 3,000-unit rise in the quantity demanded
D)$1,000 drop in price leads to a 333-unit rise in the quantity demanded
E)12 percent rise in price leads to a 36 percent rise in the quantity demanded

Question

Quizplus · Accepted Answer

The formula for price elasticity of demand is: % change in quantity demanded / % change in price.
Using this formula, we can rearrange it to find the % change in quantity demanded: % change in quantity demanded = price elasticity of demand * % change in price.
Substituting the given values: % change in quantity demanded = 3 * (-12) = -36.
This means that a 12% drop in price leads to a 36% rise in the quantity demanded. Hence, the correct answer is A.

If the Price Elasticity of Demand for Cheer Detergent Is