If quantity demanded for sneakers falls by 6 percent when price increases 20 percent,we know that the absolute value of the own price elasticity of sneakers is:
A) 0.3.
B) 0.7.
C) 2.3.
D) 3.3.

Question

Quizplus · Accepted Answer

Using the own price elasticity formula:

% change in quantity demanded / % change in price = absolute value of own price elasticity

We know that:

% change in quantity demanded = -6% 
% change in price = 20%

Thus, plugging in the numbers we get:

-6% / 20% = -0.3

But since the question is asking for the absolute value, we can drop the negative sign and get:

0.3

Therefore, the own price elasticity of sneakers is 0.3. However, this is not one of the options provided. Instead, we need to find the absolute value of the reciprocal of this value:

|1/0.3| = 3.333 ≈ 3.3

Therefore, the answer is C) 3.3.

If Quantity Demanded for Sneakers Falls by 6 Percent When