If the price elasticity of demand is equal to 2.3,then a 1 percent increase in price will result in a 2.3 percent decrease in quantity demanded.

Question

Quizplus · Accepted Answer

The statement accurately describes the concept of price elasticity of demand, which measures the responsiveness of quantity demanded to changes in price. An elasticity of 2.3 means that a 1% increase in price leads to a 2.3% decrease in quantity demanded. This suggests that the demand for the product is relatively elastic, meaning that consumers are sensitive to price changes and will adjust their purchasing behavior accordingly.

If the Price Elasticity of Demand Is Equal to 2