Question

1.Price of a commodity increases from ₹ 10 to ₹ 12 per unit and the price elasticity of demand is -0.5. The quantity demanded at initial price was 500 units. What will be the new quantity demanded?

(1 Point)​

Answer 1

Supposing the price (P) before change in demand =Rs.X.

Price elasticity of demand (E

d

)=(−)

Q

P

×

△P

△Q

Here, △P=Rs.5;△Q=(−)5 units

P=Rs.X;Q=100 units and E

d

=1.2

Price elasticity of demand (E

d

)=(−)

Q

P

×

△P

△Q

=1.2

Or, (−)

100

X

×

5

−5

=1.2

Or,

100

X

=1.2

Or, X=1.2×100=120

Price before change in demand =Rs.120.