Last week, the quantity of apples demanded fell by 6%. If this was a result of a 10% price increase, what is the price elasticity of demand for apples... Accounting MCQs | Accounting MCQs

Last week, the quantity of apples demanded fell by 6%. If this was a result of a 10% price increase, what is the price elasticity of demand for apples?

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Detailed Answer

Answer (D) is correct. The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price. Thus, the change in quantity of 6% divided by the 10% price increase produces an elasticity of 0.6.