Question

If the price elasticity of demand for Omo washing powder is 3.0, a ________ drop in price leads to a __________ rise in the quantity demanded.

Answer 1

12 per cent; 36 per cent

Elasticity of Demand =$\frac {( \%change in quantity demanded) } {(\% change in price)}$ ;

Therefore an elasticity of 3 means that % change in quantity demanded will be thrice the % change in price.