Question

a consumer purchases 20 units at the price of rs 10 per unit.the price elasticity of demand is (-1).if price decreases and becomes rs 8 per unit,calculate the quantity demanded by the consumers

Answer 1

Answer:

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Answer 2

Explanation:

Formula of elasticity of demand is

ep = ♢Q ÷ ♢P × P ÷ Q (♢= change , Q= quantity demanded , P= Price)

ATQ,

ep= -1 Q= 20, P= 10, ♢Q= x ♢P= 10-8=2

Putting the values in formula we get

=》-1 = x ÷ 2 × 10 ÷ 20

=》-1 = x÷ 2 × 1 / 2

=》-1 = x ÷ 4

=》x = -4

Now ♢Q = Original Q demanded - change

= 20 - (-4)

= 20 + 4

= 24.

So quantity demanded = 24

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