If the price elasticity of demand for a good is 4.0, then a 10% increase in price would result in a: A. 40% decrease in the quantity demanded. B. 4% decrease in the quantity demanded. C. 10% decrease in the quantity demanded.
Price elasticity of demand = (% change in Q demanded / % change in price). Given the price elasticity of demand and the percentage change in price, we can solve for the percentage change in Q demanded.
