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Suppose a 1% increase in price will lead to a 4% decrease in unit sales. What...

Suppose a 1% increase in price will lead to a 4% decrease in unit sales. What is the absolute value of the price elasticity of demand (|ED|)?

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Answer #1

Elasticity = % change in sales / % change in price

Elasticity = -4 / 1 = -4

| ED | = | -4 | = 4

Absolute value of elasticity is 4

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