This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
Price elasticity of demand is (-1), at a given price the consumer buys 60 units of the good. How many units will the consumer buy if the price falls by 10%:

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Step 1: Identify the given values. Price elasticity of demand (PED) is given as . Initial quantity demanded () is 60 units. The price falls by , so the percentage change in price () is .
Step 2: Use the price elasticity of demand formula to find the percentage change in quantity demanded. The formula for price elasticity of demand is: Substitute the given values into the formula: Now, solve for the percentage change in quantity demanded ():
Step 3: Calculate the new quantity demanded. A increase in quantity demanded means the quantity will increase by of the initial quantity. Increase in quantity = of units The new quantity demanded () is the initial quantity plus the increase: The consumer will buy .
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