: A firm finds that its price elasticity of demand is 4.0. Currently, the firm is selling 2000 units per month at $5 per unit.If it wishes to increases its quantity sold by 10%, it must lower its price by:a. $.40b. 4.0%c. 2.5%d. $.50

Price elasticity of demand studies what percentage of demand will change when there is a change in…

A firm finds that its price elasticity of demand is 4.0. Currently, the firm is selling 2000 units per month at $5 per um If it wishes to increases its quantity sold by 10%, it must lower its price by: a. 5.40 b. 4.0% c. 2.5% d. $.50

A firm finds that its price elasticity of demand is 4.0. Currently, the firm is selling 2000 units per month at $5 per um If it wishes to increases its quantity sold by 10%, it must lower its price by: a. 5.40 b. 4.0% c. 2.5% d. $.50

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A firm finds that its price elasticity of demand is 4.0. Currently, the firm is selling 2000 units per month at $5 per unit.
If it wishes to increases its quantity sold by 10%, it must lower its price by:
a. $.40
b. 4.0%
c. 2.5%
d. $.50

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