If the absolute value of the price elasticity of demand for a product is 1.5, and the price of a product increased 30 percent, then the quantity demanded will decline by
A) 45 percent.
B) 20 percent.
C) 5 percent.
D) 10 percent.

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. If the elasticity is 1.5 and the price increases by 30%, the quantity demanded will decrease by 1.5 * 30% = 45%.

If the Absolute Value of the Price Elasticity of Demand