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2/10=0.2 <1 the good is price inelastic

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โˆ™ 2011-03-14 18:30:50
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Q: What is the price elasticity for a good when there is a 10 percent decrease in price which results in a 2 percent increase in quantity demanded?
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Related questions

What is an increase in quantity demanded?

what in is an increase in quantity demanded


What happen to most goods and services when there is an increase in price?

When there is an increase in price, there is a decrease in the quantity demanded.


Define elastic demand?

Elastic demand is when there is a small increase in Quantity Price and a large decrease in Quantity Demanded.


Significance of elasticity of demand to firm?

It will help the firm determine whether an increase in the price of their good will increase or decrease total revenue. If demand is elastic, then an increase in price will lead to a more than proportionate decrease in quantity demanded. Therefore increasing the price for a good with elastic demand will decrease total revenue for the firm If demand is inelastic, then an increase in price will lead to a less than proportionate decrease in quantity demanded. Therefore increasing the price for a goods with inelastic demand will increase total revenue for the firm


Suppose the elasticity of demand for cereal is 1. If cereal increases in price by 25 percent how much will the quantity demanded decrease by?

25 percent


Suppose the price elasticity of demand for bread is 0.20 If the price of bread falls by 10 percent the quantity demanded will increase by?

2%.


Elasticity of demand?

The responsiveness of quantity demanded to changes in the price of a good


When demand is elastic a decrease in price causes quantity demanded to?

These factors mean that quantity will increase at a more than proportionate amount to price.


What is price elasticity of demand?

Price elasticity of demand measures how much the quantity demanded responds to a change in the price of that product, computed as the percentage in quantity demanded divided by the percentage change in price. If the quantity demanded changes substantially from a price, it can be said that demand is elastic. If the quantity demanded changes are slight from a change in price, demand is said to be inelastic.


How is price and quantity demanded related?

As a general rule, as the price level increases the quantity demanded will decrease, and vice versa. If the good or service is inelastic (e.g. a necessity or necessary to survival) a change in price will affect the quantity in a less than proportionate manner. That is, if there is a increase in price, the quantity demanded will increase only a small (if any) amount. If the good or service is elastic (e.g. luxury items) a change in price will affect quantity demanded more than proportionately. So if the the price increases, quantity demanded will decrease a large (more than proportionate) amount.


Price elasticity of demand in the marker place?

Price elasticity of demand is the responsiveness of quantity demanded of a good to a change in its price.Basically it describes how consumers react to a price change.The price elasticity of demand is calculated byPED= %Quantity demanded : % Change of Priceor in words: the percentage change in the quantity demanded divided by the percentage change in price


How do you define elasticity of demand?

The responsiveness of quantity demanded to changes in the price of a good


What is the price of elasticity of demand?

The responsiveness of quantity demanded to changes in the price of a good


The price elasticity of demand is a measure of the?

responsiveness of a quantity demanded to a change in price


Indicate the importance of elasticity of demand in business decisions?

If demand is inelastic then quantity demanded does not react strongly to price changes. Revenue of a firm (or even tax revenue) depends on quantity sold and amount received per unit (price or tax rate). Thus if demand is largely inelastic, then the firm can increase the price and the quantity sold will not suffer. Thus revenue increases. If demand is largely elastic then increasing the price may actually cause a decrease in revenue. As price increases, quantity demanded/sold decreases. Since R=PQ, revenue can decrease because the decrease in Q outweighs the increase in P. The price flexibility a firm has depends on the elasticity of demand.


Which is most consistent with the law of demand?

An increase in the price of heating oil causes a decrease in the quantity of heating oil demanded.


When there is a change in the quantity demanded what happens to the demand curve?

Decrease in quantity demanded usually results from an increase in price and vice versa. When the price of a product increases, the demand curve itself is not affected. However, the quantity demanded decreases to a higher point along the demand curve.


If the income elasticity of demand for a product is -0.5 then?

Income Elasticity:Income Elasticity of Demand is measure of percentage change in demand for a commodity due to 1% change in income of consumers. Negative Income Elasticity :Increase in Income of consumers lead to decrease in the quantity demanded for a commodity.Example: unbranded items.so if Income Elasticity for product is -0.5 then its demand will be decreases as Income of consumers increases.


Explain the effects of a rise in the price on market when the price elasticity of demand for product is inelastic?

Revenue of the producer will increase since there will be no change in quantity demanded.


When a price of a good increased by 2 percent the quantity demanded decreased by 10 percent What is the price elasticity of demand?

when the price of a good increased by 2%,the quantity demanded of it decreased by 10% the price elasticity of demand of demand is


What is unitary elasticity?

Unitary elasticity of demand, in which the percentage change in the quantity of a product demanded is the same as the percentage change in price.


What is abnormal demand?

Abnormal demand curve is a curve which slopes downwards from left to right indicating that price and quantity demanded has an inverse relationship and as price falls quantity demanded increase and as price increases quantity demanded decrease, this brings about a shift along the same demand curve


What is the elastic demand?

Elasticity of demand is the responsiveness of quantity demanded of a good or service to changes in the price. Elastic demand means that for a change in price, the change in quantity demanded is more than proportionate. So the cheaper the price gets (say 1 unit), the quantity demanded will increase improportionately (say 2 units).


Definitions of income elasticity of demand?

The responsiveness of quantity demanded of a good to changes in income


The price elasticity of demand measures the responsiveness of quantity demanded to a change in price?

true