If a 15% increase in price for a good results in a 20% decrease in quantity demanded,the price elasticity of demand is
A)0.75.
B)1.25.
C)1.33.
D)1.60.

Question

Quizplus · Accepted Answer

To calculate the price elasticity of demand, we use the formula:
% change in quantity demanded / % change in price

Given that a 15% increase in price results in a 20% decrease in quantity demanded, we can calculate:
% change in quantity demanded = (20 / 100) = 0.2
% change in price = (15 / 100) = 0.15

Substituting these values in the formula:
Price elasticity of demand = 0.2 / 0.15 = 1.33

Therefore, the correct answer is C) 1.33.

If a 15% Increase in Price for a Good Results