Answer:
Option (B) is correct.
Explanation:
Given that,
Percentage increase in price = 5%
Percentage decrease in quantity demanded = 15%
Therefore,
[tex]Elasticity\ of\ demand=\frac{percentage\ change\ in\ quantity\ demanded}{percentage\ change\ in\ price}[/tex]
[tex]Elasticity\ of\ demand=\frac{15}{5}[/tex]
= 3.0
Hence, elasticity of demand facing Billy Bob's Barber Shop is 3.0
The price elasticity of demand faced by Billy Bob's barbershop would be 3.0.
Price elasticity of demand for goods is a measurement of how flexible the quantity demanded is to its price. When the price increases, the quantity demanded decreases for almost any good, but it decreases more for some than for others.
The formula for finding price elasticity of demand:
[tex]\text{Price Elasticity of Demand} = \dfrac{\%\triangle\text{Quantity Demanded}}{\%\triangle\text{Price}}[/tex]
Computation of price elasticity of demand:
Given,
% Increase in price = 5%,
% Decrease in Quantity Demanded = 15%.
Now, applying the given values in the formula, we have:
[tex]\text{Price Elasticity of Demand} = \dfrac{\%\triangle\text{Quantity Demanded}}{\%\triangle\text{Price}}\\\\\\\text{Price Elasticity of Demand} =\dfrac{15\%}{5\%}\\\\\\\text{Price Elasticity of Demand} =3.0[/tex]
Therefore, the price elasticity of demand would be 3.0.
Learn more about price elasticity, refer:
https://brainly.com/question/25706924
