If a price elasticity of a good was 2, how much would the price have to...
If a price elasticity of a good was 2, how much would the price have to increase to lead to an increase in output of 6%.
Homework Answers
3 percent increase in price is needed to increase the output by 6 percent
|
P |
Q |
% change in P |
% change in Q |
Ed |
|
1 |
1 |
|||
|
2 |
3 |
100.0% |
200.0% |
2 |
|
2.06 |
3.18 |
3.0% |
6.0% |
2 |
In the above example we can see that 6% increase in output is 3.18 and in order to increase to 3,18 the price needs to be increases to 2.06 which forms 3 percent increase in price.
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