Ask Question
BusinessBusiness
20 December, 04:46

Determine the price elasticity of demand if, in response to an increase in price of 10 percent, quantity demanded decreases by 20 percent. Instructions: Enter your response rounded to one decimal place. Price elasticity of demand: Is demand elastic or inelastic? Demand is

+2
Answers (2)
  1. 20 December, 05:06
    0
    Demand is elastic, PED = 2.

    Explanation:

    Price elasticity of demand is simply the degree of responsiveness of quantity demanded to a change in demand, and it is calculated by dividing the % change in Quantity demanded by the % change in Price, i. e. % Change in Qty Demanded / % Change in Price.

    To determine if the demand is elastic or inelastic, let's calculate the price elasticity of demand (PED), given that % Change in Price = 10%, % Change in QD = 20%.

    PED = % Change in QD / % Change in Price

    PED = 20%/10% = 2

    Demand is elastic if PED is >1, therefore since the calculated PED is 2, we can conclude that the demand is elastic.
  2. 20 December, 05:08
    0
    The formula is:

    % change in Quantity Demanded divided by % change in Price

    increase in price of 10 percent, quantity demanded decreases by 20 percent.

    -20% divided by 10% = - 2

    Under price elasticity of demand the negative sign is ignored therefore the product is Elastic

    Elasticity is the degree of responsiveness of a change in quantity demanded to a change in price.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Determine the price elasticity of demand if, in response to an increase in price of 10 percent, quantity demanded decreases by 20 percent. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
What is one of the best ways to determine what kind of business you'll enjoy? A. Buy an established business. B. Create one related to what you do in your free time. C. Get advice from a professional. D.
Answers (2)
XYZ Corp. has a bond issue with a $ 1,000 par value and a 15% coupon rate. It pays interest annually and has 15 years remaining to maturity. It just made a coupon payment (i. e., it has 15 coupon payments left to make).
Answers (1)
What are the three practices of oligopolies that concern the government the most?
Answers (2)
Marko, Inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,200, $10,200, and $16,400 over the next three years, respectively. After that time, they feel the business will be worthless.
Answers (1)
Milk Benefits Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. Andrew Products Inc., a large conglomerate, pursues a transnational strategy.
Answers (1)
New Questions in Business
True or False: The basic economic theory of supply and demand suggests that when price drops, consumers will buy more and thus generate stronger demand.
Answers (1)
If you think carefully about what you're doing, always ask for advice when you need it, and keep asking questions, starting a business can be
Answers (2)
16. What size paper should you use for a legal document? A. 3" x 5" B. 8/2" x 11" C. 872" x 14" D. 74" x 1072"
Answers (2)
Assume an economy where there are two producers: a wheat producer and a bread producer. In a given year, the wheat producer grows 30 million bushels of wheat of which 25 million bushels are sold to the bread producer at $3 per bushel, and 5 million
Answers (1)
A company is just getting started and needs new equipment, but does not have a large amount of cash. Since the company business will also require frequent updating of the equipment, it is better to
Answers (1)
Home » Business » Determine the price elasticity of demand if, in response to an increase in price of 10 percent, quantity demanded decreases by 20 percent. Instructions: Enter your response rounded to one decimal place.
Sign Up Forgot Password?