Question

Demand increases by 10 units when the price decreases by rupees 2 .As a result , demand increase to 100 units and price decreases to rupees 8 .Find out the price elasticity of demand.

Answer 1

ur answer is Ed = 0.55
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Answer 2

The answer is as follows:

0.5555

Explanation:

Given that,

Percentage change in price:

= (Change in price ÷ Initial price) × 100

= (2 ÷ 10) × 100

= 20%

Percentage change in Quantity demanded:

= (Change in Quantity ÷ Initial Quantity) × 100

= (10 units ÷ 90) × 100

= 11.11%

Therefore, the price elasticity of demand is as follows:

= Percentage change in Quantity demanded ÷ Percentage change in price

= 11.11% ÷ 20%

= 0.5555

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