Question

If the elasticity of demand for Good A is −3, a 33 percent decrease in quantity demanded of Good A results from a(n) ________ in the price of Good A. a. 99 percent decrease b. 99 percent increase c. 11 percent decrease d. 11 percent increase e. 33 percent decrease

Answer 1

Answer:

Option (d) is correct.

Explanation:

Given that,

Elasticity of demand for Good A = −3

Percentage decrease in quantity demanded for Good A = 33%

Elasticity of demand for Good A = Percentage change in quantity demanded for Good A ÷ Percentage change in price of Good A

-3 = - 33 ÷ Percentage change in price of Good A

Percentage change in price of Good A = (-33) ÷ (-3)

                                                                 = 11%

Therefore, percentage increase in price of good A is 11%.