The price elasticity of demand for cheese has a value equal to 3 that is option D is correct.
Demand may be defined as the quantity which is needed by the consumers to satisfy their needs and to further use the products in order to gain more new products. The price elasticity of the demand may be defined as the ratio of the percentage of quantity demanded to the percentage change in price of the quantity. The formula for Price elasticity may be expressed as
Price elasticity = Percentage of quantity demanded ÷ Percentage change in price
According to question, Percentage of quantity demanded = 3% = 0.03
Percentage change in price = 1% = 0.01
Price elasticity = 0.03/0.01
Price elasticity = 3
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