The price of the water needs to be raised by 40% when the consumption of water reduces by 10% and the price elasticity of demand results to 25%.
The price elasticity of demand is determined as the proportionate variation in quantity with respect to variation in the price of a good.
Given values:
Change in water consumption (fall): 10%
Price elasticity of demand: 25%
Computation of percentage change in the price of water:
[tex]\rm\ Change \rm\ in \rm\ price \rm\ of \rm\ water=\frac{\rm\ Change \rm\ in \rm\ water \rm\ consumption}{\rm\ Price \rm\ elasticity \rm\ of \rm\ demand} \\\rm\ Change \rm\ in \rm\ price \rm\ of \rm\ water=\frac{10\%}{25\%} \\\rm\ Change \rm\ in \rm\ price \rm\ of \rm\ water=40\%[/tex]
Therefore, there is an increase in water price by 40%.
Learn more about the price elasticity of demand here:
https://brainly.com/question/15010897
#SPJ1
