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scZoUnD [109]
3 years ago
5

(2 pts) "a study of norway's railways revealed that, for rides up to 60 km, the price elasticity of the volume of passenger dema

nd was approximately −0.4. estimate the percent change in demand when the fare is increased by 10%"
Business
1 answer:
neonofarm [45]3 years ago
7 0

The price elasticity of demand is actually the ratio of change in quantity demanded over the change in price, so it is mathematically written as:

<span>PED  = % change in demand / % change in price</span>

 

Therefore calculating for % change in demand:

- 0.4 = % change in demand / 10%

% change in demand = - 4%

 

<span>So there is a 4 percent decrease.</span>

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