If the price elasticity of demand (E) for a good is -16.9, a 10% increase in the price of the Good Select one: a. result...
If the price elasticity of demand (E) for a good is -16.9, a 10% increase in the price of the Good
Select one:
a. results in a 1.69% reduction in the quantity demanded of Good E.
b. results in a 16.9% increase in the quantity demanded of Good E.
c. results in a .169% reduction in the quantity demanded of Good E.
d. results in a 169% increase in the quantity demanded of Good E.
Homework Answers
Option C. results in a 169% reduction in the quantity demanded of Good E.
Explanation: Price elasticity of demand = % change in quantity/% change in price
16.9% = % change in quantity/10%
So, % change in quantity = 16.9% * 10 = 169%
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