We observe a 15% increase in price of Nike shoes, and the price elasticity of demand for Nike shoes is -3. If so, then quantity demanded: a. will decrease by 45%. b. will increase by 45% c. will de
Question:
We observe a 15% increase in price of Nike shoes, and the price elasticity of demand for Nike shoes is -3. If so, then quantity demanded:
a. will decrease by 45%.
b. will increase by 45%
c. will decrease by 5%.
d. will increase by 5%.
Answers (1)
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Sylvia April 2, 2023 в 18:36The correct answer is (a) will decrease by 45%. Price elasticity of demand measures how much the quantity demanded changes in response to a change in price. In this case, the price elasticity of demand for Nike shoes is -3, which means that for every 1% increase in price, the quantity demanded will decrease by 3%. If there is a 15% increase in the price of Nike shoes, we can calculate the percentage change in quantity demanded by multiplying the price increase by the price elasticity of demand: -15% x -3 = 45% Therefore, the quantity demanded will decrease by 45% in response to a 15% increase in price. Hence, the correct option is (a).
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