If the price elasticity of demand for a product is equal to 0.4, then a decrease in price of 8 percent will increase quantity demanded by 3. Multiple Choice -Вook 20 percent. 0.32 percent. 3.2 percent. 0.05 percent.
If the price elasticity of demand for a product is equal to 0.4, then a decrease in price of 8 percent will increase quantity demanded by 3. Multiple Choice -Вook 20 percent. 0.32 percent. 3.2 percent. 0.05 percent.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![**Question 13**
If the price elasticity of demand for a product is equal to 0.4, then a decrease in price of 8 percent will increase quantity demanded by:
**Multiple Choice:**
- ○ 20 percent.
- ○ 0.32 percent.
- ○ 3.2 percent.
- ○ 0.05 percent.
**Explanation**
This question is about understanding the concept of price elasticity of demand. Price elasticity of demand measures how much the quantity demanded of a good responds to a change in price. It is calculated as:
\[ \text{Percentage Change in Quantity Demanded} = \text{Price Elasticity of Demand} \times \text{Percentage Change in Price} \]
Given:
- Price Elasticity of Demand = 0.4
- Decrease in Price = 8 percent
The calculation would be:
\[ 0.4 \times 8\% = 3.2\% \]
Therefore, the correct answer is: **3.2 percent.**](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F55fa1b8f-af85-487a-ba3f-73161e455858%2F07cdfe41-e374-4581-a0b4-1484c86f4d23%2Fxobup7m_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question 13**
If the price elasticity of demand for a product is equal to 0.4, then a decrease in price of 8 percent will increase quantity demanded by:
**Multiple Choice:**
- ○ 20 percent.
- ○ 0.32 percent.
- ○ 3.2 percent.
- ○ 0.05 percent.
**Explanation**
This question is about understanding the concept of price elasticity of demand. Price elasticity of demand measures how much the quantity demanded of a good responds to a change in price. It is calculated as:
\[ \text{Percentage Change in Quantity Demanded} = \text{Price Elasticity of Demand} \times \text{Percentage Change in Price} \]
Given:
- Price Elasticity of Demand = 0.4
- Decrease in Price = 8 percent
The calculation would be:
\[ 0.4 \times 8\% = 3.2\% \]
Therefore, the correct answer is: **3.2 percent.**
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