If the price elasticity of demand is equal to 4,a 1 percent increase in price 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

Quizplus · Accepted Answer

If the price elasticity of demand is equal to 4, it means that a 1% increase in price will cause a 4% decrease in quantity demanded. Therefore, the correct answer is E, which says that the quantity demanded will decrease by 4%.

If the Price Elasticity of Demand Is Equal to 4,a