Question

Suppose there is a 6 percent increase in the price of good x and a resulting 6 percent decrease in the quantity of x demanded. Price elasticity of demand for x is

Answer 1

Answer:

1

Explanation:

Data provided in the question

Increase in price of good X = 6%

Decrease in the quantity of X = 6%

So, The formula to compute the price elasticity of demand is shown below:

Price elasticity of demand = Percentage change in quantity demanded ÷ percentage change in demand

= 6% ÷ 6%

= 1

So, the price elasticity of demand is 1

Answer 2

Based on the effect on quantity demanded as a result of the change in price, the price elasticity of demand is 1.

The price elasticity of demand can be calculated as:

= Percentage change in demand / Percentage change in price

Solving would give:

= 6% / 6%

= 1

In conclusion, the price elasticity of demand is 1. Good x is therefore Unit elastic.

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