Question

A consumer purchased 10 units of a commodity when its price was 5 per unit. He purchases 12 units of the commodity when price falls to ₹4 per unit. Calculate the price elasticity of
demand for the commodity.

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Answer 1

$\bf\underline{Given :-}$

▪Quantity demanded (Q) = 10

▪Price (P) = 5

▪New quantity demanded (Q1) = 12

▪New price (P1) = 4

▪Change in quantity demanded (ΔQ) = Q1 - Q

12 - 10 = 2

$\boxed {ΔQ = 2}$

▪Change in price (ΔP) = P1 - P

4 - 5 = (-)1

$\boxed {ΔP = (-)1}$


$\bf\underline{Elasticity \:of \:demand \:(Ed)}$


$ed = ( - )\frac{Δq}{Δp} \times \frac{p}{q} \\ \\ ed = ( - )\frac{2}{( - )1} \times \frac{5}{4} \\ \frac{10}{4} = 2.5$

$\boxed {Ed = 2.5}$ $\bf\green {(Answer)}$