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if the price elasticity of demand for grapes 1.3 and the price elasticity of supply is...

if the price elasticity of demand for grapes 1.3 and the price elasticity of supply is 1.2 what would be the effects of a combined 5% decrease in demand with a 10% increase in supply? what percentage price change would you expect?

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Answer #1

Thus if Price increases by 10% then Quantity Demanded decreases by 13%.

When QD decreases by 5% then Change in price would be

Hence price Increases by 3.84%.

Hence due to increase in QS by 10% the price increases by 8.33%.

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