Question

When the price of a textbook falls by 4 ​percent, the quantity demanded of textbooks increases by 5 percent. What is the price elasticity of demand for textbooks​?

Answer 1

Answer:

The price elasticity of demand for textbooks is 1.25

Explanation:

Price elasticity of demand is given by percentage change in quantity demanded divided by percentage change in price

Percentage change in quantity of textbooks demanded = 5%

Percentage change in the price of a textbook = 4%

Price elasticity of demand for textbooks = 5% ÷ 4% = 1.25