The price elasticity of demand for a popular sporting event is 0.5. If the price of a ticket to this event increases by 12 percent, the quantity of tickets demanded will
A)decrease by 24 percent.
B)decrease by 6 percent.
C)increase by 6 percent.
D)increase by 24 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is % change in quantity demanded / % change in price. Given an elasticity of 0.5 and a price increase of 12%, the quantity demanded will decrease by 0.5 * 12% = 6%.

The Price Elasticity of Demand for a Popular Sporting Event