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If the price elasticity of demand for a product is 2. 5, then a price cut from $2. 00 to $1. 60 will:_______

Sagot :

Increase the quantity demanded by about 25 percent.

What is the short definition of price elasticity?

  • Price elasticity in business and economics refers to how much people, consumers, or producers alter their demand or the quantity supplied in reaction to changes in price or income.
  • It is mostly used to evaluate how consumer demand has changed as a result of a price change for a good or service.

What are some examples of price elasticity of demand?

  • When a price increase results in a greater percentage reduction in demand, we say a good is price elastic.
  • For instance, if price increases 20% and demand declines 50%, the PED equals -2.5. One illustration is Heinz soup. Heinz soup options are plenty today.

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