Answered

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g If the price elasticity of demand is 4, a 5 percent decrease in price will increase quantity demanded by

Sagot :

Parrain

Answer: 20%

Explanation:

The price elasticity of demand shows the increase in quantity demanded as a result of a decrease in price and vice versa.

It is calculated by the formula:

Price elasticity of demand = Change in quantity demanded / Change in price

The formula can therefore be used to find the increase in quantity. Price elasticities are usually denoted in negatives even if not shown so:

-4 = x / -5%

x = -4 * -5%

x = 20%

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