Question

Calculate the elasticity of demand for the following data:

When the price is Rs 20 per unit, demand for a commodity is 500 units. As the price falls to Rs15 per unit, demand expands to 800 Units

Answer 1

Answer:

Change in Quantity (\DeltaΔQ)=800-500=300 units

Change in price(\DeltaΔP)=15-20= -Rs.5

Elasticity Demand=\frac{ΔQ}{ΔP}× \frac{P}{Q}=\frac{300}{-5}×\frac{20}{500}= -2.4

ΔP

ΔQ

×

Q

P

=

−5

300

×

500

20

=−2.4

Demand is highly elastic as ED is greater than 1 i.e ED>1

There is inverse relationship between the price and quantity demanded because of the negative sign.

Answer 2

Answer:

hope it helps..............