Economy, asked by vprabal2020, 7 months ago

what will be the elasticity of demand,if there is a decline in price of a good by 10% and increase in demand by 30%

Answers

Answered by Anonymous

Answer:

Elastic demand occurs when changes in price cause a disproportionately large change in quantity demanded. For example, a good with elastic demand might see its price increase by 10%, but demand drop by 30% as a result. The PED of the good is 4.2, which is considered to be elastic.

Explanation:

One factor that can affect demand elasticity of a good or service is its price level. For example, the change in the price level for a luxury car can cause a substantial change in the quantity demanded.

The price elasticity of demand is calculated as the percentage change in quantity demanded (110 - 100 / 100 = 10%) divided by a percentage change in price ($2 - $1.50 / $2). The price elasticity of demand, in this case, is 0.4. Since the result is less than 1, it is inelastic.

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