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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 5TY
Textbook Problem
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A rise in the price of a certain commodity from $20 to $25 reduces quantity demanded from 25,000 to 10,000 units. Calculate the price elasticity of demand.

To determine

To calculate the price elasticity of demand.

Explanation of Solution

According to question, the proportionate change in quantity demanded will be calculated as follows:

   ΔQd=10,00025,00025,000×100=15,00025,000×100=60

Proportionate change in price will be calculated as follows:

   ΔP=252020

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