You are the only seller of eggs in town, and the price-elasticity coefficient for eggs is known to be 0.8.If you want to increase your sales quantity by 10 percent through a price change, what should you do to price?
A)increase price by 12.5 percent
B)reduce price by 12.5 percent
C)increase price by 8 percent
D)reduce price by 8 percent

Question

Quizplus · Accepted Answer

The price-elasticity coefficient for eggs is known to be 0.8, which means that a 1% change in price will lead to a 0.8% change in quantity demanded. If the seller wants to increase sales quantity by 10 percent, they need to decrease the price by 12.5 percent (10% / 0.8 = 12.5%).

You Are the Only Seller of Eggs in Town, and the Price-Elasticity