Use the price-demand equation p +0.005x=48, 0≤p≤ 48. Find the elasticity of demand when p=$16. If the $16 price is decreased by 6%, what is the approximate percentage change in demand?The elasticity of demand when p= 16 is(Type an integer or a simplified fraction.)If the price is decreased by 6%, the demand(Type an integer or a simplified fraction.)approximately%....

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Use the price-demand equation p +0.005x=48, 0≤p≤ 48. Find the elasticity of demand when p=$16. If the $16 price is decreased by 6%, what is the approximate percentage change in demand?
The elasticity of demand when p= 16 is
(Type an integer or a simplified fraction.)
If the price is decreased by 6%, the demand
(Type an integer or a simplified fraction.)
approximately%.
...

Expert Solution

Step 1

Price elasticity of demand (PED) is defined as the percentage change in the quantity demanded for a good or service with respect to percentage change in price. It is a critical concept in the law of demand. It is a measurement of how the demand for a commodity is impacted upon due to a change in price. Mathematically, it is calculated as the percentage change in the quantity demanded divided by the percentage change in price. Therefore,

$P E D = \frac{P e r c e n t a g e C h a n g e i n Q u a n t i t y D e m a n d e d}{P e r c e n t a g e C h a n g e i n P r i c e}$

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