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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 6, Problem 1DQ
Textbook Problem
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Explain why elasticity of demand is measured in percentages.

To determine

To explain the reason behind measuring the elasticity of demand in percentage form.

Explanation of Solution

The elasticity of demand measures the ratio of the percentage change in quantity demanded of a commodity to the percentage change in the price of that commodity.

To find the numerical value of responsiveness of quantity demand to the price change, some mathematical expression is required that can relate the initial demand and final demand due to change in prices.

The percentage method of elasticity shows the relation between two variables (price and quantity)...

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