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.
Answer (A) is incorrect because The inverse of the elasticity is 1.67.
Answer (B) is incorrect because Adding the 6% quantity decline to 1 results in 1.06.
Answer (C) is incorrect because The price elasticity of demand is found by dividing the 6% quantity decline by the 10% price increase, not by adding them.
|
