Question

Suppose that a 2% increase in price results in a 6% decrease in quantity demanded. Own-price elasticity of demand is equal to​

Answer 1

Answer:

The correct answer to the following question will be "3".

Explanation:

The given values are:

Percentage demand,

= 6% i.e., .06

Percentage change in the price,

= 2% i.e., .02

Now,

Own-price elasticity of demand will be:

=  $\frac{Percentage \ demand}{Percentage \ change \ in \ price}$

On substituting the estimated values, we get

=  $\frac{.06}{.02}$

=  $3$