If the price elasticity of demand for a commodity is -2.5 and the percentage decrease in the quantity demanded is 10%, find out the percentage change in its price.
Show Hint
- 25%
- -25%
- 4%
- -4%
The Correct Option is C
Solution and Explanation
Given Ed = -2.5 and % Change in Quantity Demanded = -10%
(because it's a decrease), we have:
-2.5 = (-10) / (% Change in Price)
% Change in Price = (-10) / (-2.5) = 4%
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