If the price elasticity of demand for a good is 12 then a 3

If the price elasticity of demand for a good is -1.2, then a 3 percent decrease in price results in a

3.6 percent increase in the quantity demanded.

0.4 percent increase in the quantity demanded.

6 percent increase in the quantity demanded.

2.5 percent increase in the quantity demanded.

	a.	3.6 percent increase in the quantity demanded.
	b.	0.4 percent increase in the quantity demanded.
	c.	6 percent increase in the quantity demanded.
	d.	2.5 percent increase in the quantity demanded.

If the price elasticity of demand for a good is -1.2, then a 3 percent decrease in price results in a

Correct Answer:- 3.6 percent increase in the quantity demanded.

Reason:- Price Elasticity = Percentage change in quantity demanded / percentage chnage in price

Percentage change in quantity demanded = -1.2*3 =-3.6%

negative sign indicates that there will be an inverse relation between the price and demand