If the price elasticity of demand is equal to 4,a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.
A)decrease; 25
B)increase; 4
C)decrease; 1/4
D)decrease; 4
E)increase; 1/4

Question

Quizplus · Accepted Answer

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. A price elasticity of demand of 4 indicates that a 1% increase in price will cause a 4% decrease in quantity demanded. Therefore, the answer is D - decrease by 4%.

If the Price Elasticity of Demand Is Equal to 4,a