When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. the price-elasticity of demand coefficient for this product is: a. -1.5b. -0.15c. -0.67d. -67

Correct option is (A)

Explanation:

Given:

Percentage change in price = 10%

Decrease in quantity demanded in terms of percentage = -15%

Price elasticity of demand measures the proportional change in quantity demanded due to proportional change in price. It is given by the following formula:

Price elasticity of demand = % change in quantity demanded / % change in price.

                                            = -15% / 10%

                                            = -1.5

A negative coefficient of price elasticity goes with the law of demand that states that increase in prices lead to decrease in quantity demanded.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

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reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

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superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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