Celine runs a sporting goods store and knows that the price elasticity of demand for her sports clothing line is -1.5.She is planning to lower prices by 10 percent.The percentage change in quantity demanded will be
A) 15 percent.
B) 0.15 percent.
C) 6.66 percent.
D) 0.06 percent.
E) 8.50 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is % Change in Quantity Demanded / % Change in Price. Given an elasticity of -1.5 and a price reduction of 10%, the calculation is -1.5 * (-10%) = 15%.

Celine Runs a Sporting Goods Store and Knows That the Price