question archive If the percentage increase in price is 15% and the value of the price elasticity of demand is -3, then quantity demanded a) will decrease by 5% b) will increase by 45% c) will increase by 5% d) will decrease by 45%
If the percentage increase in price is 15% and the value of the price elasticity of demand is -3, then quantity demanded a) will decrease by 5% b) will increase by 45% c) will increase by 5% d) will decrease by 45%
Subject:EconomicsPrice:2.88 Bought3
If the percentage increase in price is 15% and the value of the price elasticity of demand is -3, then quantity demanded
a) will decrease by 5%
b) will increase by 45%
c) will increase by 5%
d) will decrease by 45%
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
The correct answer is d) will decrease by 45%
This is the correct answer because the elasticity of demand is 3, which means demand is highly elastic. It means any change in price level leads to have negative impact on the demand. Here, price elasticity of demand is the ratio of percentage change in the demand to the percentage change in price. The percentage change in the price is given as 15%. So, the demand will reduce by 45%.
