If the price elasticity of demand for pineapple is 0.75,a 4% increase in the price of pineapple will lead to a:
A)3% decrease in the quantity demanded of pineapple.
B)3% increase in the quantity demanded of pineapple.
C)4% decrease in the quantity demanded of pineapple.
D)0.1875% increase in the quantity demanded of pineapple.

Question

Quizplus · Accepted Answer

Price elasticity of demand is the percentage change in quantity demanded divided by the percent change in price,here % change in quantity/4 = 0.75.The percent change in quantity must be 3.An increase in price will reduce quantity demanded,so the change is a decrease of 3%.

If the Price Elasticity of Demand for Pineapple Is 0