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

Question

Quizplus · Accepted Answer

Elasticity is calculated as the percentage change in quantity divided by the percentage change in price. Here, the percentage change in quantity is -15% and the percentage change in price is -5%. Therefore, the elasticity is (-15%)/(-5%) = 3. Thus, the answer is D.

If Quantity Decreases by 15 Percent When Prices Decrease 5