When the price elasticity of demand is -0.6,then a ________ increase in price leads to a ________ in quantity demanded.
A) 10 percent; 6 percent increase
B) 10 percent; 6 percent decrease
C) 6 percent; 6 percent increase
D) 1 percent; 6 percent decrease
E) 6 percent; 1 percent decrease

Question

Quizplus · Accepted Answer

The negative sign indicates an inverse relationship between price and quantity demanded. The absolute value of 0.6 indicates that the percentage change in quantity demanded is 60% of the percentage change in price. Therefore, a 10 percent increase in price would result in a 6 percent decrease in quantity demanded.

When the Price Elasticity of Demand Is -0