HI guys please help me understand how to calculate the answer for the following question
A good has a unitary price elasticity of demand and at a price of $20 a firm sells 40000 units. how many will the firm sell if it charges a price of $5
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- Thread Starter
- 03-06-2016 22:47
- 04-06-2016 17:30
A fall in price from $20 to $5 is a 75% fall so we are looking for a 75% rise in demand. 75% of 40 000 is 30 000 so demand will be 70 000.