If the price elasticity of demand for Clean Sheets laundry detergent is 1.50, a 5 percent decrease in the price will lead to which of the following?
A)a 7.5 increase in quantity
B)a 1.50 increase in quantity
C)a 7.5 decrease in quantity
D)a 1.50 decrease in quantity

Question

Quizplus · Accepted Answer

A price elasticity of demand of 1.50 means that a 1 percent decrease in price leads to a 1.50 percent increase in quantity demanded. So a 5 percent decrease in price would lead to a 7.5 percent increase in quantity demanded (5 x 1.50 = 7.5). Therefore, the correct answer is A.

If the Price Elasticity of Demand for Clean Sheets Laundry