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Sagot :
If the price elasticity of demand for a good is -0.40, then a 10 percent increase in price would result in: a. a 4.0 percent decrease in the quantity demanded.
What is price elasticity?
Price elasticity of demand is the term used to describe the relationship between the percentage change in a product's quantity sought and the percentage change in price. It aids economists in understanding how supply and demand vary in response to price changes in a given good. Many people are willing to pay more for Apple products because of how well-known the Apple brand is. Even if the price goes higher, many consumers will continue to buy Apple iPhones. If it were a lesser-known brand, like Dell laptops, you would assume demand to be price elastic. To calculate price elasticity, divide the change in supply (or demand) for a good, service, resource, or commodity by the change in price.
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