Answer: To increase sale by 10%, the seller must lower the price of the good by 12.5%.
Explanation: Price elasticity of demand measures the responsiveness of quantity demanded to a change in the price. Since, demand and price for a normal good are negatively related to each other, price elasticity is also negative. It can be calculated using,
[tex]e_{d}=\frac{Precentage change in quantity demanded}{Percentage change in price}
-0.8=\frac{10}{Percentage change in price}
Percentage change in price = -\frac{10}{0.8}
Percentage change in price = -12.5[/tex]
Therefore, to increase sale by 10%, the seller must lower the price of the good by 12.5%.
