The Price Elasticity of Demand for a good is (-) 0.4

CBSE Class 12 CBSE Class 12 Economics
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1

The Price Elasticity of Demand for a good is (-) 0.4. If its price increases by 5%, by what percentage will its demand fall? Calculate.

2

Percentage Change in Quantity Demanded /Percentage Change in Price
Percentage Change in Quantity Demanded /5 = 0.4
Percentage Change in Quantity Demanded = 0.4 x 5 = 2
Demand falls by 2%.