If the price of a good goes up by 5 percent and, in response, the quantity demanded falls by 15 percent, the price elasticity of demand will be:
A) .05.
B) 3.
C) 0.3333.
D) 0.15.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is -15% / 5% = -3, indicating a high elasticity.

If the Price of a Good Goes Up by 5