Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.
-If the price elasticity of demand for a product is equal to 4, a 1 percent increase in price of the product will cause the quantity demanded to _____ by _____ percent.
A)increase; 0.25
B)decrease; 0.25
C)increase; 4
D)decrease; 25
E)decrease; 4

Question

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. 
-If the price elasticity of demand for a product is equal to 4, a 1 percent increase in price of the product will cause the quantity demanded to _____ by _____ percent.
A)increase; 0.25 
B)decrease; 0.25 
C)increase; 4 
D)decrease; 25 
E)decrease; 4

Quizplus · Accepted Answer

A price elasticity of demand of 4 means that a 1 percent increase in price will cause a 4 percent decrease in quantity demanded.

​Figure 53

Figure 53