If the elasticity of demand coefficient for a good is 6 (in absolute terms), we know:
A)that for every 1% increase in quantity, there will be a 6% increase in price.
B)that for every 1% increase in quantity, there will be a 6% decrease in price.
C)that for every 6% increase in quantity, there will be a 1% increase in price.
D)that for every 6% increase in quantity, there will be a 1% decrease in price.

Question

If the elasticity of demand coefficient for a good is 6 (in absolute terms), we know:
A)​that for every 1% increase in quantity, there will be a 6% increase in price.
B)​that for every 1% increase in quantity, there will be a 6% decrease in price.
C)​that for every 6% increase in quantity, there will be a 1% increase in price.
D)​that for every 6% increase in quantity, there will be a 1% decrease in price.

Quizplus · Accepted Answer

The elasticity of demand coefficient indicates how much the quantity demanded of a good responds to a change in price. A coefficient of 6 means that for every 1% decrease in price, there will be a 6% increase in quantity demanded. Therefore, inversely, for every 6% increase in quantity demanded, there must be a 1% decrease in price to maintain that level of demand, aligning with option D.

If the Elasticity of Demand Coefficient for a Good Is