Answered

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Assume the price elasticity of demand for a product is 0.6. When the price is $15, consumers buy 50 units of the good. If the price decreases by twenty percent, how many units will consumers buy

Sagot :

The consumer will buy 56 Units

Procedure to solve

Δp = 20% of 15

Δp = 20/100 × 15

Δp = 3

e = 0.6

Formula:

e = (Δq/Δp)×p/q

0.6 = (Δq/-3)×15/50

0.6 × (-3) = Δq × 0.3

Δq = 1.8/0.3 = 6

Price decreases and quantity increases

Therefore

q' = q+Δq

q' = 50+6

q' = 56

p is the given price, q is the given quantity, Δp is the change in price, Δq is the change in quantity, e is the elasticity, q' is the new quantity.

Price Elasticity

The price elasticity of demand can be said to be an economic measure of the increase in the quantity of commodity demands or consumes in relationship to its change in price.

The price elasticity of demand refers to the percentage change in the quantity demanded of goods divided by the percentage change in the price.

Learn more about elasticity here:

https://brainly.com/question/14450755

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