Suppose the price elasticity of demand for a good is -0.2 if there is a 5% increase in the price of the good, by what percentage will the demand for the good go dowm ?

Suppose the price elasticity of demand for a good is -0.2 if there is

1.	Suppose the price elasticity of demand for a good is -0.2 if there is a 5% increase in the price of the good, by what percentage will the demand for the good go dowm ?
Answer» Solution :Given % Change (Rise)in price =5% Elasticity of Demand `(E_(d))= (-)0.2` Elasticirty of Demand `(E_(d))= ("PERCENTAGE Change in QUANTITY DEMANDED")/("Percentage Change in price ")` `(-) 0.2 = ("Percentage Change in QunatityDemanded")/5` Percentage fall in demand =1%