Question

Why does if make sense that there was a negative percentage change in the quantity of cable TV subscriptions demanded in response to an increase in the price of these subscriptions?

Short answer

Rise in the price of cable TV subscriptions resulted in a decline in the number of cable TV subscriptions.

Step-by-step solution

- Introduction

To Prove : Negative percentage change in the quantity of cable TV subscriptions demanded in response to an increase in the price of these subscriptions

- Solution

A average cable TV subscription in the United States recently grew by roughly $6\%$across the country. During the same time period, the number of cable subscriptions demanded fell by $0.6\%$

If all other factors remain constant, the price elasticity of cable TV demand equals the percentage change in quantity demanded divided by the percentage change in price, or

${\epsilon }_p=\frac{-0.6\%}{+6\%}=-0.1$

As a result, a $1\%$rise in the price of cable TV subscriptions resulted in a $0.1\%$decline in the number of cable TV subscriptions sought during this time period.