If the price elasticity of DVD recorders is -0.3 and price increases 20%, what happens to the quantity of DVD recorders demanded?
A) quantity decreases by 26%
B) quantity decreases by 6.5%
C) quantity increases by 15%
D) quantity increases by 21%

Question

Quizplus · Accepted Answer

The price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in price. A negative elasticity means that quantity demanded decreases when price increases. The magnitude of the elasticity tells us how much quantity demanded will change for a given change in price. In this case, the elasticity is -0.3, which means that a 1% increase in price will lead to a 0.3% decrease in quantity demanded.If the price increases by 20%, we can use the elasticity to calculate the percentage change in quantity demanded:```%ΔQ = -0.3 * %ΔP%ΔQ = -0.3 * 20%%ΔQ = -6%```Therefore, the quantity of DVD recorders demanded will decrease by 6%.

If the Price Elasticity of DVD Recorders Is -0