# Price elasticity of demand for Michelle’s muffins is 1.7 in California while sold for \$3.00 per muffin. If the price was to increase to \$3.30 what percentage decline would we expect in the quantity demanded?

Category:

#### Price elasticity of demand for Michelle’s muffins is 1.7 in California while sold for \$3.00 per muffin. If the price was to increase to \$3.30 what percentage decline would we expect in the quantity demanded?

 Price elasticity of demand for Michelle’s muffins is 1.7 in California while sold for \$3.00 per muffin. If the price was to increase to \$3.30 what percentage decline would we expect in the quantity demanded?

Price elasticity of demand for Michelle’s muffins is 1.7 in California while sold for \$3.00 per muffin. If the price was to increase to \$3.30 what percentage decline would we expect in the quantity demanded?

Top of Form

• Quantity demanded will decline by 17%
Explanation:
Price elasticity of demand = 1.7
PED = %change in quantity demanded / %change in price
PED = 1.7
%change in quantity demanded = ?
%change in price = (\$3.3 – \$3) / \$3 * 100%
3 / 3 * 100% = 10%
PED = %change in Q / %change in P
1.7 = %Q / 10%
%Q = 10% * 1.7
%Q = 17%
The quantity will change by 17%
Since quantity demanded and price are negatively related, an increase in one causes a decrease in the other.
If price increases, quantity demanded decreases
Quantity demanded will therefore decrease by 17%

Purchase answer to view it. \$5