If quantity increases by 15 percent when prices increase 5 percent then elasticity for this product is _____
A)15.
B)10.
C)5.
D)3.
E)1.

Question

Quizplus · Accepted Answer

The formula for elasticity is %change in quantity demanded/%change in price. Since quantity increases by 15% and price increases by 5%, the %change in quantity demanded is 15%/100% = 0.15 and the %change in price is 5%/100% = 0.05.

Plugging these values into the formula:

Elasticity = 0.15/0.05 = 3

Therefore, the elasticity for this product is 3.

If Quantity Increases by 15 Percent When Prices Increase 5