Butch's Barber Shop Knows That It Faces an Elasticity of Demand

question 172

Multiple Choice

Butch's Barber Shop knows that it faces an elasticity of demand equal to 3.0 over the relevant range of its demand curve. A 1% increase in its price will do what to the number of haircuts demanded from Butch's Barber Shop?

• A)​It will increase by 0.33%
• B)​It will increase by 3.0%
• C)​It will decrease by 0.33%
• D)​It will decrease by 3.0%

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