1. The elasticity of demand for marijuana is -0.5. If the price of marijuana increases by...

1. The elasticity of demand for marijuana is -0.5. If the price of marijuana increases by 10%, by how much does quantity demanded decrease?

Solutions

Expert Solution

Since, elasticity of demand= proportionate Change in quantity demanded/proportionate Change in prices

So, -0.5 = proportionate Change in quantity demanded/10

or proportionate Change in quantity demanded= -0.5×10 = -5 %

Hence, when the price of marijuana increases by 10 %, the quantity demanded of marijuana decrease by 5 %. Ans.

Rahul Sunny answered 2 years ago

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