Jimmy's Peanut Farm wants to increase the quantity of peanuts that it sells by 1 percent. The price elasticity of demand for peanuts sold by Jimmy's Peanut Farm is 0.4. What is the percentage price cut that will achieve the firm's objective? The percentage price cut is _ nothing percent.

Jimmy's Peanut Farm can increase the quantity sold by 1% only when the demand for peanuts increases. Demand for peanuts will increase only when the price of peanuts decrease. The Price Elasticity of Demand measures the responsiveness of demand to a percentage change in price.

The formula for Price Elasticity of Demand (PED) is given by the formula:

[tex]\mathbf{PED = \frac{percentage change in quantity}{percentage change in price}}[/tex]

We have:

Percentage increase in quantity 1% or 0.01

Price Elasticity of Demand (PED) 0.40

Re-arranging the PED formula above we get,

[tex]\mathbf{percentage change in price}= \frac{percentage change in quantity}{PED} *100}[/tex]

Substituting the values in the equation above we get,

[tex]{percentage change in price} = \frac{0.01}{0.4}*100 =2.5[/tex]

Jimmy's Peanut Farm wants to increase the quantity of peanuts that it sells by 1 percent. The price elasticity of demand for peanuts sold by Jimmy's Peanut Farm is 0.4. What is the percentage price cut that will achieve the​ firm's objective? The percentage price cut is _ nothing percent.

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Jimmy's Peanut Farm wants to increase the quantity of peanuts that it sells by 1 percent. The price elasticity of demand for peanuts sold by Jimmy's Peanut Farm is 0.4. What is the percentage price cut that will achieve the firm's objective? The percentage price cut is _ nothing percent.