If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent,the price elasticity of demand ( ) is 3.

Question

If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent,the price elasticity of demand (  ) is 3.

Quizplus · Accepted Answer

If the price elasticity of demand is 3, then a 15% increase in price should result in a 45% decrease in quantity demanded (since 3 x 15 = 45). However, in this scenario, the quantity demanded only declines by 5%. This suggests that the price elasticity of demand is actually less than 1, meaning that demand is relatively inelastic and changes in price have a smaller effect on quantity demanded. Therefore, the statement is false.

If the Price of Chocolate Increases by 15 Percent and the Quantity