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Elasticity remains constant along the demand curve

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Question 1

Suppose that 50 units of a good are demanded at a price of $1 per unit. A reduction in price to $0.20 results in an increase in quantity demanded to $70 units. Shows that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduced the quantity demanded, assuming price elasticity remains constant along the demand curve?

Reference no: EM132414936

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