If the elasticity of demand for Good A is -3, a 33% decrease in quantity demanded of Good A results from a(n):
A) 99% decrease in the price of Good A.
B) 99% increase in the price of Good A.
C) 11% decrease in the price of Good A.
D) 11% increase in the price of Good A.
E) 33% decrease in the price of Good A.

Question

Quizplus · Accepted Answer

Elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of -3, a 33% decrease in quantity demanded corresponds to a 11% increase in price (33% / 3 = 11%).

If the Elasticity of Demand for Good a Is -3