Question

if the price elasticity of demand for chips is 0.75, then a 20 percent increase in price would result in a _______ percent decrease in the quantity demanded

Answer 1

If the price-elasticity of demand for chips is 0.75, then a 20 percent increase in price would result in a 15 percent decrease in the demand quantity.

As per the question statement, the price-elasticity of demand for chips is 0.75 and there is a 20 percent increase in price.

We are required to calculate the resulting decrease in the demand quantity by percent, based on the conditions mentioned in the statement above.

Here, given Price-Elasticity of Demand $(E_{d})$ = 0.75

Also given the percent increase in price = 20

Now, we know that,

$(E_{d})$ = [(Percentage change in quantity demanded)/(Percentage change in price]

Or, [0.75 = (x/20)]...[Assuming "Percentage change in quantity demanded" to be "x"]

Or, [x = (20 * 0.75)]

Or, [x = 15]

That is, If the price-elasticity of demand for chips is 0.75, then a 20 percent increase in price would result in a 15 percent decrease in the demand quantity.

• Price-Elasticity of Demand: Price Elasticity of Demand is a measurement of the change in the consumption of a product in relation to a change in its price and is expressed mathematically as the quotient of (Percentage Change in Quantity Demanded) divided by (Percentage Change in Price)

To learn more about Price-Elasticity of Demand, click on the link below.

brainly.com/question/28523466

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