calculate price elasticity by percentage method from from the following data: price (£ per unit ) //Expenditure (£) 5/500,6/450
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Answer:
Price of X (Rs. per unit) Total Expenditure (Rs.) Demand (Units)
4
5 600
525
4
600
=150
5
525
=105
Here, P=Rs.4; P
1
=Rs.5;
△P=P
1
−P= Rs.5−Rs.4= Rs.1
Q=150 units; Q
1
=105 units; $$
△Q=Q
1
−Q= (105−150) units =(−)45 units
Price elasticity of demand(E
d
)=(−)
Q
P
×
△P
△Q
=(−)
150
4
×
1
−45
=1.2
Price elasticity of demand =1.2
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