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27 July, 08:51

Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower the price by?

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  1. 27 July, 10:39
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    Price should be lowered by 50%

    Explanation:

    Demand is the buyers ability & willingness to buy at a price, time.

    Price Elasticity of Demand is the responsiveness of demand to price change.

    = Percentage Change in Quantity Demanded / Percentage Change in Price

    Ped = %∆Q / %∆P

    0.1 = 5 / %∆P

    %∆P = 5 / 0.1

    Percentage change in price = 50%
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