College Textbooks wants to increase the quantity of textbook

College Textbooks wants to increase the quantity of textbooks that it sells by 5 percent The price elasticity of demand and textbooks sold by College Textbooks it 5.0. What is the percentage price cut that will achieve the firm\'s objective?

Solution

The Price Elasticity of Demand (commonly known as just price elasticity) measures the rate of response of quantity demanded due to a price change. The formula for the Price Elasticity of Demand (PEoD) is:

PEoD = (% Change in quantity demanded )/(% Change in Price)

5= 5%/X

X=5X 5=25