The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by
A) 2.5 percent.
B) 8 percent.
C) 10 percent.
D) 12.5 percent.

Question

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The Answer of The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by
A) 2.5 percent.
B) 8 percent.
C) 10 percent.
D) 12.5 percent.

The Quantity of New Cars Increases by 10 Percent