Question

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%.

Answer 1

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.