Question

Due to 5% fall in price of a commodity its demand rise by 7.5%. Calculate and State coefficient of price elasticity of demand.Whether the demand is elastic or inelastic? give reason.​

Answer 1

PED= percentage in quantity demanded/percentage change in price

but since we already have the changes

change in Qty demanded=7.5%

change in Price                 =5%

therefore PED =7.5/5= 1.5

>> hence the coefficient of PED =1.5

hence Demand is Elastic because the coefficient of PED is greater than 1

PED > 1