When price of a good falls …
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When price of a good falls from Rs.10 per unit to Rs.5 per unit, its demand rises from 8 units to 14 units. Find out the price elasticity of demand. *
3 points
Posted by Mohit Bhati 4 years, 11 months ago
- 2 answers
Muskan ?? 4 years, 11 months ago
Given, percentage change in quantity demanded=100%
P=Rs.10
P1=Rs.5
P1-P=(-5)Rs.
Percentage change in price =
-5/10×100=(-50)
Elasticity of demand =
Percentage change in quantity demanded /percentage change in price =
(-)100%/(-50)=2
When quantity demanded falls by 50%
Ed=2
Elasticity of demand =
Percentage change in quantity demanded /percentage change in price
2 =(-) -50%/percentage change in price
Percentage change in price =(-){-50}/2=25%
When price of commodity rises by 25%,new price=Rs.10+2.5(25%of Rs.10)=Rs.12.5
Elasticity of demand =2
New price =12.5Rs.
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Binay Budhia 4 years, 11 months ago
1Thank You