If a 9 percent increase in price for a good results in an 8 percent decrease in quantity demanded, the price elasticity of demand is
A)1.13.
B)0.09.
C)0.89.
D)0.08.

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, which in this case is -8% / 9% = -0.89. The negative sign indicates the inverse relationship between price and quantity demanded, but the magnitude (0.89) is what's typically reported.

If a 9 Percent Increase in Price for a Good