Answer:
0.5% increase
Explanation:
the price elasticity of demand (PED) = % change in quantity demanded / % change in price. It measures how the quantity demanded changes in response to a 1% increase in price.
The price elasticity of supply (PES) = % change in quantity supplied / % change in price. It measures how the quantity supplied changes in response to a 1% increase in price.
In this case the demand increases, which should result from a decrease in price, but in order to satisfy the demand, the supply must increase and to do so, it will increase only by 1 / (1 + 1) = 1/2 of the original change in quantity demanded = 0.5%
