Question : If the price elasticity of demand for a good is -1.5, then a 10% increase in price will result in a:
Option 1: 10% decrease in quantity demanded.
Option 2: 15% decrease in quantity demanded.
Option 3: 10% increase in quantity demanded.
Option 4: 15% increase in quantity demanded.
Correct Answer: 15% decrease in quantity demanded.
Solution : The correct answer is (b) 15% decrease in quantity demanded.
The price elasticity of demand measures the responsiveness of quantity demanded to changes in price. When the price elasticity of demand is negative (as indicated by the negative sign), it means that the good has an inverse relationship between price and quantity demanded. In this case, a 10% increase in price would lead to a 15% decrease in quantity demanded.
The magnitude of the price elasticity of demand (-1.5) indicates that the percentage change in quantity demanded is 1.5 times greater than the percentage change in price. Therefore, a 10% increase in price results in a 15% decrease in quantity demanded (10% x 1.5 = 15%).
Question : If the price elasticity of demand for a good is 1.2, then a 10% decrease in price will result in a:
Question : If the price elasticity of demand for a good is 2.5, then a 10% decrease in price will result in a:
Question : If the price elasticity of demand for a good is -0.5, then a 10% increase in price will result in a:
Question : If the price elasticity of demand for a good is 0.8, then a 10% increase in price will result in a:
Question : Statement 1: If the price elasticity of demand for a product is -1.5, a 10% increase in price will result in a 15% decrease in quantity demanded.
Statement 2: The absolute value of the price elasticity of demand represents the percentage change in quantity demanded for
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