Question

Please help

Let price elasticity of demand is (-) 4. By what percentage the quantity demanded goes down if price of the good increases by 4%.

Answer 1

The quantity demanded goes down by 16%

Step-by-step explanation:

The price elasticity of demand (PED) formula is:

PED = %change in quantity demanded / %change in price

Now, we simply rearrange the formula:

%Change in quantity demanded = PED x %change in price

And finally, we plug the amounts into the formula:

%Change in quantity demanded = -4 x 0.04

= -16