A firm has just decreased its price by 15% over last year's price, and it found that the quantity sold increased by 5%

Subject:EconomicsPrice:2.88 Bought3

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A firm has just decreased its price by 15% over last year's price, and it found that the quantity sold increased by 5%.

1. What is its price elasticity of demand?

2. What additional information would you search for before you did your calculation?

• A. I would check to see if consumer tastes or expectations had changed.
• B. I would check to see if income had changed.
• C. I would check to see if the prices of complements and substitutes had changed.
• D. I would check to see if taxes or subsidies had changed.
• E. I would check all of the above to make sure that all other things remained constant.