If the price elasticity of demand for a good is 1.65,then a 3 percent decrease in price results in a
A)0.55 percent increase in the quantity demanded.
B)1.82 percent increase in the quantity demanded.
C)4.95 percent increase in the quantity demanded.
D)5.55 percent increase in the quantity demanded.

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 1.65, a 3% decrease in price results in a 4.95% increase in quantity demanded (1.65 * 3 = 4.95).

If the Price Elasticity of Demand for a Good Is