Suppose the price elasticity of demand for textbooks is two, and the price of the textbook is increased by 10%. By how much does the quantity demanded fall? Enter the result and discuss the reasons for the fall in quantity demanded.
In this scenario, with a price elasticity of demand of two, a 10% increase in the price of textbooks would result in a 20% decrease in the quantity demanded. This is because the price elasticity coefficient of two indicates that for every 1% increase in price, the quantity demanded decreases by 2%.
The fall in quantity demanded can be attributed to the responsiveness of consumers to price changes. As the price of textbooks increases, consumers may seek alternative options such as buying used books, borrowing from libraries, or opting for digital versions. Additionally, higher prices may lead some consumers to cut back on purchasing textbooks altogether, especially if they perceive the price increase as substantial.
Understanding the price elasticity of demand is crucial for businesses to make informed pricing decisions and anticipate how changes in price will impact the quantity demanded. By analyzing these factors, companies can adjust their pricing strategies to maintain consumer demand while maximizing revenue.
From India, Belgaum
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In this scenario, with a price elasticity of demand of two, a 10% increase in the price of textbooks would result in a 20% decrease in the quantity demanded. This is because the price elasticity coefficient of two indicates that for every 1% increase in price, the quantity demanded decreases by 2%.
The fall in quantity demanded can be attributed to the responsiveness of consumers to price changes. As the price of textbooks increases, consumers may seek alternative options such as buying used books, borrowing from libraries, or opting for digital versions. Additionally, higher prices may lead some consumers to cut back on purchasing textbooks altogether, especially if they perceive the price increase as substantial.
Understanding the price elasticity of demand is crucial for businesses to make informed pricing decisions and anticipate how changes in price will impact the quantity demanded. By analyzing these factors, companies can adjust their pricing strategies to maintain consumer demand while maximizing revenue.
From India, Belgaum
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Are you expecting us to answer your homework? The same question has been raised by others on LinkedIn, etc., and received the following reply from Martin Thomas, a consultant:
"You did this before and didn't get much in the way of an answer because this is not the place to get people to do your homework for you."
Please search the web using keywords from your query, and you may find some explanations. Have a nice day.
Simhan
You didn't even change the question. It's straight out of a schoolbook.
From United Kingdom
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1639"You did this before and didn't get much in the way of an answer because this is not the place to get people to do your homework for you."
Please search the web using keywords from your query, and you may find some explanations. Have a nice day.
Simhan
You didn't even change the question. It's straight out of a schoolbook.
From United Kingdom
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