To determine the change in quantity demanded given the price increase, we can use the concept of price elasticity of demand (PED).
The formula for price elasticity of demand is:
\[ \text{Elasticity} = \frac{%\text{ change in quantity demanded}}{%\text{ change in price}} \]
In this case, we know:
- Elasticity = 1 (which means demand is unit elastic)
- %\text{ change in price} = +25%
We can rearrange the formula to find the percentage change in quantity demanded:
\[ %\text{ change in quantity demanded} = \text{Elasticity} \times %\text{ change in price} \]
Substituting the values in:
\[ %\text{ change in quantity demanded} = 1 \times (+25%) = +25% \]
Since the price increase leads to a decrease in quantity demanded, we have:
\[ %\text{ change in quantity demanded} = -25% \]
Therefore, the quantity demanded will decrease by 25 percent.
The answer is 25 percent.
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