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19 November, 09:28

The price elasticity of demand is:

a) the ratio of the percentage change in quantity demanded to the percentage change in price.

b) the responsiveness of revenue to a change in quantity.

c) the ratio of the change in quantity demanded divided by the change in price.

d) the response of revenue to a change in price.

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Answers (1)
  1. 19 November, 09:31
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    a) the ratio of the percentage change in quantity demanded to the percentage change in price.

    Explanation:

    The formula of the price elasticity of demand is shown below:

    = (change in quantity demanded : average of quantity demanded) : (percentage change in price : average of quantity demanded)

    Change in quantity demanded would be

    = Q2 - Q1

    And, average of quantity demanded would be

    = (Q1 + Q2) : 2

    Change in price would be

    = P2 - P1

    And, average of price would be

    = ($P1 + P2) : 2
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