Egg producers know that the price elasticity of demand for eggs is 0.1.If they want to increase sales by 5%,they will have to lower price by:
A)0.1%.
B)1%.
C)5%.
D)50%.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is: % change in quantity demanded / % change in price. With an elasticity of 0.1, to achieve a 5% increase in sales, the price must be lowered by 5% / 0.1 = 50%.

Egg Producers Know That the Price Elasticity of Demand for Eggs