3 years ago

Suppose that a 2% increase in price results in a 6% decrease in quantity demanded. Own-price elasticity of demand is equal to

SAT

1 answer:

kodGreya [7K]3 years ago

8 0

Answer:

The correct answer to the following question will be "3".

Explanation:

The given values are:

Percentage demand,

= 6% i.e., .06

Percentage change in the price,

= 2% i.e., .02

Now,

Own-price elasticity of demand will be:

= $\frac{Percentage \ demand}{Percentage \ change \ in \ price}$

On substituting the estimated values, we get

= $\frac{.06}{.02}$

= $3$

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