Suppose that when the price of donuts rises 10%, the quantity demanded of donuts falls 3%. Based on this information, what is the approximate absolute price elasticity of demand for donuts?
A) 3.33
B) 0.3
C) 30
D) 1.3

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is |-3%/10%| = 0.3, indicating that the demand for donuts is relatively inelastic.

Suppose That When the Price of Donuts Rises 10%, the Quantity