Question

demand for luxury product falls from 500 to 200 when price rises from from 2000 to 2200, in this case, by what percentage would demand contract, if the price rose by by 1%

Answer 1

Answer:

hope it helps you

Explanation:

Price elasticity refers to how the quantity demanded or supplied of a good changes when its price changes. In other words, it measures how much people react to a change in the price of an item.

Price elasticity of demand refers to how changes to price affect the quantity demanded of a good. Conversely, price elasticity of supply refers to how changes in price affect the quantity supplied of a good.

Answer 2

Answer:

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Explanation:

When demand is inelastic – a rise in price leads to a rise in total revenue – a 20% rise in price might cause demand to contract by only 5% (Ped = -0.25)

When demand is elastic – a fall in price leads to a rise in total revenue - for example a 10% fall in price might cause demand to expand by only 25% (Ped = +2.5)

When demand is perfectly inelastic (i.e. Ped = zero), a given price change will result in the same revenue change, e.g. a 5 % increase in a firm's prices results in a 5 % increase in its total revenue