Assume that demand for a service depends uponprice and income, where the price elasticity ofdemand is Ep o=-0.6 and the income elasticity ofdemand isE1, q=1.2. If price falls by 49 and income rises by296, the quantity demanded of the service willO A. increase by 69O B. increase by 4.896O C. decrease by 9.6%O D. decrease by 2.49

Price elasticity of demand: It refers to the change in the quantity demanded in response to the…

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If price falls by 49 and income rises by uantity demanded of the service will

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 34P: The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to...

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Question

Assume that demand for a service depends upon
price and income, where the price elasticity of
demand is Ep o=-0.6 and the income elasticity of
demand is
E1, q=1.2. If price falls by 49 and income rises by
296, the quantity demanded of the service will
O A. increase by 69
O B. increase by 4.896
O C. decrease by 9.6%
O D. decrease by 2.49

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