Question

Wen's Noodles wants to increase the quantity of noodles that it sells by 20 percent. The price elasticity of demand for noodles sold by Wen's Noodles is 3.8. What is the percentage price cut that will achieve the firm's objective?

Answer 1

5.26%

Step-by-step explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Elasticity of demand = percentage change in quantity demanded/ percentage change in price

3.8 = 20% / percentage change in price

20/3.8 = 5.26%

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