Question

As price of a commodity increase from₹4 per unit to ₹5 per unit,demand falls from 20 units to 10 units.find out the elasticity of demand.

Answer 1

Demand has fallen by 10-20/100*100=-10
Price has risen by 5-4/4*100=25
Hence, price elesticity of demand will be
(-)(-)10/25=2/5