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Price elasticity of demand of a good is `-0.75`. Calculate the percentage fall in its price that will results in 15 per cent rise in its demand. |
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Answer» Elasticity of demand `= ("Percentage change in quantity demanded")/("Percentage change in price")` or `= 0.75 = (15)/(x)`...[Let x be the percentage change in price] or `-0.75x = 15 x = 15 xx (100)/(-0.75) x = - 20` Price will fall by 20% |
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