Suppose that when the price for Good A increases by 7 percent, the quantity demanded for...
Suppose that when the price for Good A increases by 7 percent, the quantity demanded for that product decreases by 6 percent. Accordingly, calculate the own price elasticity of demand for Good A. Is demand for Good A elastic, inelastic, or unit elastic?
Homework Answers
Price elasticity of the goods = % change in the demand / % change in the price.
= 6 /7
= 0.85, As the value is less than 1 the price elasticity of the good is inelastic.
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