Assume that the price elasticity of demand for petrol is -0.06.If the government tax causes the price of petrol to increase by 50 per cent, what will be the decrease in the quantity of petrol demanded?
A)0)5 per cent
B)3)0 per cent
C)8)33 per cent
D)50 per cent

Question

Quizplus · Accepted Answer

The decrease in the quantity of petrol demanded can be calculated using the price elasticity of demand formula: Percentage Change in Quantity Demanded = Price Elasticity of Demand * Percentage Change in Price. Here, it's -0.06 * 50% = -3%. This means the quantity demanded will decrease by 3%.

Assume That the Price Elasticity of Demand for Petrol Is