Question

demand increased by 10 units when the price decreases by ruppes 2 ,demand increase to 100 units and price decrease to ruppes 8 find out the price elasticity of demand

Answer 1

q =10
P=2
Q=90
Q1=100
P1=8
P=10

Ed=10/(-)2×10/90
= (-)5/9 = (-)0.56

Answer 2

The Price elasticity of demand will be:

It is given in the question, the change in Q is equal to 10.

The change in price is equal to -2  

If q1 = 100, p1 = 8

Now, the value of q2 and p2 is to be found.

Therefore, q2 = 100 - 10 = 90

And, p2 = 8 - 10 = -2

Now, the elasticity of demand (Ed) is equal to  $\frac{10 \times 10}{-2 \times 90}=\frac{100}{-180}=\frac{-5}{9} = -0.55$ . The negative sign indicate that the elasticity of demand has gone down.