contestada

(2 pts) "a study of norway's railways revealed that, for rides up to 60 km, the price elasticity of the volume of passenger demand was approximately −0.4. estimate the percent change in demand when the fare is increased by 10%"

Respuesta :

barnuts

The price elasticity of demand is actually the ratio of change in quantity demanded over the change in price, so it is mathematically written as:

PED  = % change in demand / % change in price

 

Therefore calculating for % change in demand:

- 0.4 = % change in demand / 10%

% change in demand = - 4%

 

So there is a 4 percent decrease.