Answer to Question #130976 in Microeconomics for tuba

Question

the price elasticity of demand for commodity x is _1.2. Therefore if the price of x increases by 50% the quantity demand decrease by the same propotion true or false?

Answer 1

False

Price elasticity of demand =$\frac{\%change in quantity}{\% change price}$ = 1.2

% $\Delta$ quantity = % $\Delta$ price $\times$ 1.2

= 50% $\times 1.2= 60$ %

quantity demanded will decrease by 60 percent and not 50 percent