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    What is the price elasticity of demand?

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    The price of a firm's product increases from $5 to $6. As a result, the quantity demanded of the product declines from 600,000 to 500,000. The price elasticity of demand for the good is equal to (Use the arc price elasticity of demand).

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    Solution Preview

    The arc price elasticity of demand is the calculated using the percentage change is calculated relative to the midpoint. Thus for ...

    Solution Summary

    Mathematical calculation of the price elasticity of demand is provided in the solution.