Question

A consumer buy 10 units of a good at a price ₹ 5 per unit. Elasticity of demand is 2 . Price falls to ₹4 unit. How many units will consumer demand this new price?

Answer 1

Given: Q−10,Q  1 =12,P=5,P  1 =4

ΔP=(4−5)=−1,ΔQ=(12−10)=2

E  d=(−1)  Q P  ∗  ΔP  ΔQ

=(−)  10 5 ∗  −1 2  =1​  

E  d  =1 Unitary elastic demand.