Price elasticity of demand (PED) = percentage change in quantity / percentage change in price, the firm should reduce the price of textbooks by 1% to achieve a 5% increase in sales.
The term "elasticity" refers to a measurement of how responsively a quantity that is required or supplied is to one of its determinants. When a factor, like as price or supply, changes, the demand for a good responds quickly. Conversely, items that are inelastic maintain their demand even when prices increase significantly (e.g., gasoline or food).
The demand for the good is said to be elastic if the percent change in quantity sought exceeds the percent change in price. Elastic demand is the property of a good that occurs, for instance, when its price rises by 10% while its demand falls by 20%.
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