The price elasticity of demand for sautéed grasshoppers in Swénzëniy Township is given as -16. Suppose...

The price elasticity of demand for sautéed grasshoppers in Swénzëniy Township is given as -16. Suppose you are told that following a price increase, quantity demanded fell by 5%. What was the percentage change in price that brought about this change in quantity demanded?

Expert Solution

Price elasticity of demand measures the % change in quantity demanded in response to 1% change in price.

Price elasticity of demand = % change in quantity demanded/ % change in price

-16 = -5/ % change in price

% change in price = 5/16 = 0.3125

Rahul Sunny answered 2 years ago

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