Final answer:
If the price increases by 10 percent and the price elasticity is 1.1, the quantity demanded will decrease by approximately 11 percent.
Step-by-step explanation:
The term 'price elasticity' refers to the responsiveness of quantity demanded to changes in price. It measures how sensitive demand is to a change in price. In this case, if the price increases by 10 percent and the price elasticity is 1.1, the quantity demanded will decrease by approximately 11 percent.
For example, if the original quantity demanded was 100 units, a 10 percent increase in price would result in a decrease in quantity demanded to approximately 89 units. This is calculated by multiplying the percentage change in price (10 percent) by the price elasticity (1.1) and applying the formula:
Percentage change in quantity demanded = (change in quantity/original quantity) x 100