Suppose the price elasticity of demand for beef is about 0.6. Other things equal, this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to
A)increase by approximately 12 percent.
B)decrease by approximately 12 percent.
C)decrease by approximately 32 percent.
D)decrease by approximately 26 percent.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. With an elasticity of 0.6, a 20% increase in price leads to a 12% decrease in quantity demanded (0.6 * 20% = 12%).

Suppose the Price Elasticity of Demand for Beef Is About