Question

At a price of Rs.5 per pen,the demand is 40 pens. The elasticity of demand is 0.75 and increase in price is Rs.1 calculate the change in quantity of pens demanded.

Answer 1

The given is the change in quantity of pens demanded.

Explanation:

$\text{Change in price} = 6-5 = 1$

$\text{Let final quantity x then change in quantity} = 40 - x$

$E_d = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}}$ 

$0.75 = \dfrac{40-x}{40}\times 5$

$0.75 \times40 = (40-x)5$

$x= 34$

$\text{Thus, chnage in quantity} = 40 - 34 = 6 units$

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Elasticity of demand

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Answer 2

Answer:

1

Explanation:

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