Question

At the price of ₹ 20, quantity demanded is 40 units. If price increases by ₹ 10, price elasticity of demand is 0.4. Calculate the final quantity demanded.

Answer 1

Answer:

Given, P = 10 ; P1 = Rs.8 ;

P =P1 -P = Rs.8 - Rs.10 = (-) Rs.2

Ed = (-) 2

Explanation:

percentage change in price = P / P X 100 = -2/10 X 100 = (-)20 %

price Elasticity of demand (Ed) =

percentage change in quantity demanded / percentage change in price -2 =

percentage change in quantity demanded / 20%

percentage increase in quantity demanded = 40%