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Sagot :
A 12 percent increase in the quantity demanded must be the result of a 15% decrease in the price.
Given the data in the quest;
- Price Elasticity of demand; [tex]_PE_d = 0.8[/tex]
- Increase in the Quantity demanded; [tex]Q_d = 12\% = 0.12[/tex]
Price elasticity of demand [tex]_PE_d[/tex] is simply the estimate of the difference in the quantity purchased of a product with respect to the difference in its price.
Now, Price elasticity of demand [tex]_PE_d[/tex] by Percentage Method:
[tex]_PE_d[/tex] = percentage change in quantity demand / percentage change in price
[tex]_PE_d =\frac{q_1-q_2}{q_1}\ *\ \frac{p_1}{p_2-p_1}[/tex]
That is; [tex]_PE_d =\frac{Q_d}{percentage\ change\ in\ price}[/tex]
We substitute in our values
[tex]0.8 = \frac{0.12}{percentage\ change\ in\ price}[/tex]
[tex]Percentage\ change\ in\ price = \frac{0.12}{0.8}[/tex]
[tex]Percentage\ change\ in\ price = 0.15 = 15\%[/tex]
Therefore, A 12 percent increase in the quantity demanded must be the result of 15% decrease in the price.
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