Asked by Morris Mwendwa on Apr 28, 2024
Verified
Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.
Price Elasticity
A measure of the responsiveness of the quantity demanded or supplied of a good or service to a change in its price.
Quantity Demanded
The total amount of a good or service that consumers are willing and able to purchase at a given price level.
- Gain insight into the construct and numerical determination of price elasticity of demand.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
True
Explanation :
The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which in this case is -20% / 10% = -2.0 (ignoring the negative sign as elasticity is often considered in absolute terms).
Learning Objectives
- Gain insight into the construct and numerical determination of price elasticity of demand.