if a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

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04-10-2021
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if a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

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anthougo anthougo · Answer 1 · 2021-10-11T11:28:58+02:00

When a 15% increase in price results in a 20% decrease in quantity demanded of a good, it is concluded that the price elasticity of demand is negative or more than -1.

There is a negative price elasticity of demand, meaning that the 15% increase in price brings out a higher (20% decrease) negative change in the quantity demanded by consumers.

Data and Calculations:

Percentage change in quantity demand = 20%

Percentage change in price = 15%

Price elasticity of demand = % Change in Quantity Demand/% Change in Price

= -20%/15%

= -1.33

The change is negative as a normal demand curve should be.

Thus, the price elasticity of demand for this good is negative.

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