An accountant increases the price he charges for his services by 14 percent. In response, the demand for his services decreases

Question

Sindrei [870]

2 years ago

14

An accountant increases the price he charges for his services by 14 percent. In response, the demand for his services decreases

by 6 percent. Will the accountant's revenue from his accounting services increase, decrease, or remain unchanged?

Business

1 answer:

blondinia [14] · Answer 1 · 2022-08-21T23:08:52+03:00

Answer:

Decrease

Explanation:

Given that

Change in quantity demanded = 6%

change in price = 14%

Price elasticity of demand = (Percentage change in quantity demanded) ÷ (percentage change in price)

= 6% ÷ 14%

= 0.42

Price elasticity of demand is greater than 1 that which means demand is elastic. Therefore the increase in price, the revenue will decrease because demand is elastic.

An accountant increases the price he charges for his services by 14 percent. In​ response, the demand for his services decreases

An accountant increases the price he charges for his services by 14 percent. In response, the demand for his services decreases