If the price elasticity of demand for a good is 0.2,then a 3 percent decrease in price results in a
A)0.6 percent increase in the quantity demanded.
B)1.5 percent increase in the quantity demanded.
C)2 percent increase in the quantity demanded.
D)6 percent increase in the quantity demanded.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. With an elasticity of 0.2, a 3% decrease in price results in a 0.6% increase in quantity demanded (0.2 * 3% = 0.6%).

If the Price Elasticity of Demand for a Good Is