Question

A household spends rs. 120 on purchase of a commodity when it's price is rs. 6 per unit. When price rises to rs. 10 per unit, his total expenditure on this commodity becomes rs. 180. calculate price elasticity of demand by percentage change method .​

Answer 1

Answer:

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.

Explanation:

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