Question

Hi price of a car fall from 500002 4.5 lakh the demand increases from 400 to 500 units what is the price of elasticity of demand

Answer 1

hello

the given data is

initial price -> ₹ 5,00,000

new price -> ₹4,50,000

initial demand -> 400

new demand -> 500

change in quantity demanded -> 100

change in price -> ₹50,000

as per the formula

e = change in quantity/ initial quantity. X initial price /change in price

e = 50,000/450000 X 500/100

e = 0.5

so the elasticity in demand is 0.5