Question

7. Suppose that originally, a product was being sold at Rs10 per unit and the quantity demanded was
1,000 units. The product price changes to Rs14 and, as a result, the quantity demanded changes to
500 units. Calculate the price elasticity of demand.
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Answer 1

Hello !

Answer :

ep = ∆q/∆p x p/q

= 500/4 x 10/1000

= 1.25.

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