Suppose that legalizing the use of marijuana would decrease its price by 81 percent. If the price elasticity of demand for marijuana is -2.75 , what would be the percentage increase in the quantity of marijuana demanded from legalizing marijuana ? nothing percent. (Enter a numeric response using a real number rounded to two decimal places.)

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Mathematics

Camila

11 September, 05:24

Suppose that legalizing the use of marijuana would decrease its price by 81 percent. If the price elasticity of demand for marijuana is -2.75 , what would be the percentage increase in the quantity of marijuana demanded from legalizing marijuana ? nothing percent. (Enter a numeric response using a real number rounded to two decimal places.)

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Walker Villegas · Answer 1

222.75%

Step-by-step explanation:

Elasticity of demand for marijuana

(dQ/Q) / (dP/P) = - 2.75

If the price drops 81%, that is dP/P=-0.81

If we re-arrange the equation

dQ/Q = - 2.75 * dP/P = - 2.75 * (-0.81) = 2.2275

The demand will be 222.75% higher if the prices drop by 81%