Question

A consumer purchases 40 units of a commodity at a price of Rs 5 per unit and when the price falls to Rs 3 per unit, the quantity demanded increases to 54 units. Calculate the price elasticity of demand.

Answer 1

Explanation:

Given: Q−10,Q1=12,P=5,P1=4

ΔP=(4−5)=−1,ΔQ=(12−10)=2

Ed=(−1)QP∗ΔPΔQ

=(−)105∗−12=1

Ed=1 Unitary elastic demand.