If the absolute value of the price elasticity of demand for cell phone service is 3, then if the price of cell phone service increases by 1%, quantity demanded would:
A)increase by 0.33%.
B)decrease by 0.33%.
C)increase by 3%.
D)decrease by 3%.

Question

Quizplus · Accepted Answer

A price elasticity of demand of 3 implies that for each 1% increase in price, quantity demanded will decrease by 3%. Therefore, if the price of cell phone service increases by 1%, quantity demanded would decrease by 3%.

If the Absolute Value of the Price Elasticity of Demand