Question

If elasticity of demand is 0.5, and the price is lowered from $20 to $19, by what percentage will quantity demanded rise?

Answer 1

To find the percentage of demand rise, the formula is

Elasticity = (percentage change of demand/percentage change of price)

Elasticity is equal to 0.5. The percentage change of price is:
Percentage change of rise = (20-19)/20 * 100 = 5%
Then,

0.5 = Percentage change in demand/5%
Percentage change in demand = 2.5%