microeconomics

prateekbande
Posts: 4
Joined: Wed Aug 29, 2012 8:06 pm

microeconomics

Postby prateekbande » Wed Aug 29, 2012 8:20 pm

If the price elasticity of demand is 1.5 and a change in the price of the product increases the quantity demanded by 4%, then what is the percent change in price?

A) +2.667%.
B) –0.375%.
C) −2.667%.
the ans was c why not a.

Tags:

akshat
Good Student
Posts: 10
Joined: Wed Aug 22, 2012 11:53 am

Re: microeconomics

Postby akshat » Fri Aug 31, 2012 11:15 am

Because the increase in price would lead to decrease in quantity demanded and decrease in price leads to increase in quantity demanded! Thus, the direction of change in these two are opposite to each other and hence the negative sign.


Return to “CFA Level I”



Disclaimer

Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to abuse@edupristine.com and we will rectify it.