How is the price-change formula to predict the change in the equilibrium price resulting from a change in demand calculated?
A) by dividing the percentage change in price by the sum of the price elasticities of supply and demand
B) by dividing the percentage change in demand by the sum of the price elasticities of supply and demand
C) by dividing the percentage change in supply by the sum of the price elasticities of supply and demand
D) by dividing the percentage change in income by the sum of the price elasticities of supply and demand

Question

Quizplus · Accepted Answer

The price-change formula is calculated by dividing the percentage change in demand by the sum of the price elasticities of supply and demand. This formula helps predict the change in the equilibrium price resulting from changes in demand. By using this formula, businesses can make informed decisions about pricing strategies, and policymakers can assess the impact of policies on market outcomes.

How Is the Price-Change Formula to Predict the Change in the Equilibrium