Question

The own price elasticity of demand for apples is -1.5. If the price of apples falls by 6 percent, what will happen to the quantity of apples demanded

A.It will increase 4 percent.

B.It will decrease 4 percent.

C.It will increase 9 percent.

D. It will decrease 9 percent.

Answer 1

Option (C) is correct.

Step-by-step explanation:

Given that,

own price elasticity of demand = -1.5

Percentage change in price of apple = 6 percent

Therefore,

Own price elasticity of demand = Percentage change in quantity demanded ÷ Percentage change in price

1.5 = Percentage change in quantity demanded ÷ 6

Percentage change in quantity demanded = 1.5 × 6

= 9 percent

Hence, the quantity demanded for apple increases by 9 percent when the price fall by 6 percent.