Question

According to​ Duffy-Deno (2003), when the price of broadband access capacity​ (the amount of information one can send over an internet​ connection) increases​ 10%, commercial customers buy about​ 3.8% less capacity. What is the elasticity of demand for broadband access capacity for​ firms? The elasticity of demand is nothing. ​(Enter a numeric response using a real number rounded to two decimal​ places.)

Answer 1

Answer: -0.38

Explanation:

Price elasticity of demand is a term on economics which measures the change in the quantity demanded of a particular good or service in relation to its price change. It is used to determine the changes in demand due to changes in price and to understand how the real economy works.

Expressed mathematically, price elasticity of demand is:

Price elasticity of demand= % change in quantity demanded / % change in price

Price elasticity of demand= -3.8 / 10 =-0.38

Therefore, the price elasticity if demand is -0.38.