question archive 10) A firm adopts a technology that allows you to increase your output by 15%
10) A firm adopts a technology that allows you to increase your output by 15%
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10) A firm adopts a technology that allows you to increase your output by 15%. If the elasticity of demand in the US is -3, how should you adjust your price if you want to sell all of your output?" 5% lower. [correct; 960Q= e(964P]. Therefore, an 15% increase in Q = -3(96AP), hence "AP = -598] b. 0.5% lower. [Remember, 64Q= e(964P)] C 15% higher. [Remember, 9%4Q= e(9647)] d. 15% lower. [Remember, 9:4Q= e(%AF)]
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a.5% lower
Step-by-step explanation
PED=% change in quantity demanded/% change in price,
but PED=-3,% change in quantity demanded=15.
To find % change in price,
-3=15/X
X==-5 implying a reduction in prices by 5%
