Question

At a price of Rs 4 per unit a consumer buys 50 units of good . The price elasticity of demand is 2 how many units will the consumer buy at Rs 3 per unit

Answer 1

The consumer buy 75 units at 3rs per unit.

Answer 2

P1 = 4

Q= 50 units

Ep = (-2)

del P= P1-P

4-3=1

Ep= -( del Q/del P×P1/Q1)

-2= -(del Q/1×4/50)

-2=-4Q/50

del Q= 50× -2/-4

del Q =25

del Q= Q1- Q

25= Q1-50

25+50=Q1

Q1= 75 units