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Question
The demand for good rises by 20 percent as a result of all in its price. Its price elasticity of demand is (−) 0.8. Calculate the percentage fall in price.
Solution
`E_d="Percentage Change in Quantity Demanded"/"Percentage Change inPrice"`
or, 0.8 = `20/"Percentage Change in Price"`
or, Percentage Change in Price =`20/0.8` = 25%
Thus, the percentage fall in the price 25.
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