Economics 2281 · O Level · Price elasticity of demand (PED)

Price elasticity of demand (PED) — practice question

A hotel owner in Malaysia discovers that the price elasticity of demand (PED) for accommodation in the locality is $-1.7$. If the hotel owner lowers the price of a room by $5\%$, what change would occur in the demand for a room?

  • AIt would decrease by $2.9\%$.
  • BIt would decrease by $8.5\%$.
  • CIt would increase by $2.9\%$.
  • DIt would increase by $8.5\%$.

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