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Demand increases by 10 units when …

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Demand increases by 10 units when the price decreases by Rs.2 . As a result , demand increases to 100 units and price decreases to Rs.8 .Find out the price elasticity of demand.

  • 3 answers

Meghna Surana 8 years, 2 months ago

Given,

change in Q = 10                                                                       change in P = -2

Q= 100                                                                                   P1= 8 

Q=?                                                                                         P=?

 we know,               

change in Q = Q- Q                                                                 change in P = P1- P

Q=100-10 = 90                                                                          P= 10 

                          Ed =   CHANGE IN Q / change in price    x     original P / orignal Q

                               = 10/-2    X    10/90

                              = -5/9

                              = -0.55

  

                    

Bhavya Dwivedy 4 years, 3 months ago

thanks for your answer .

but in my book answer for same question is given -0.55 

 

Anuj Goel 8 years, 2 months ago

NEW QUANTITY DEMANDED = 100 UNITS                             NEW PRICE = RS. 8

CHANGE IN QUANTITY DEMANDED = 10 UNITS                    CHANGE IN PRICE = RS. -2

ORIGINAL QUANTITY DEMANDED = 90 UNITS                      ORIGINAL PRICE = RS. 10

ELASTSCITY = (CHANGE IN PRICE * ORIGINAL QUANTITY DEMANDED)/(CHANGE IN QUANTITY DEMANDED * ORIGINAL                                    PRICE)

                     = (-2*90)/(10*10)

                     = -1.8

NEGATIVE SIGN IS DUE TO INVERSE RALATION.

http://mycbseguide.com/examin8/

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