The own price elasticity of demand for apples is −1.2.If the price of apples falls by 5 percent,what will happen to the quantity of apples demanded?
A) It will increase 5 percent.
B) It will fall 4.3 percent.
C) It will increase 4.2 percent.
D) It will increase 6 percent.

Question

Quizplus · Accepted Answer

The own price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. Given an elasticity of -1.2 and a price decrease of 5%, the quantity demanded will increase by 6% (-1.2 * -5% = 6%).

The Own Price Elasticity of Demand for Apples Is −1