Question

Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower the price by?

Answer 1

Price should be lowered by 50%

Step-by-step explanation:

Demand is the buyers ability & willingness to buy at a price, time.

Price Elasticity of Demand is the responsiveness of demand to price change.

= Percentage Change in Quantity Demanded / Percentage Change in Price

Ped = %∆Q / %∆P

0.1 = 5 / %∆P

%∆P = 5 / 0.1

Percentage change in price = 50%