Question

Price elasticity of demand for a product is 'unity'. A household by 25 units of this product at the price of rs. 5 per unit. if the price of product rises by Rs 1,how much quantity of product will the household buy?​

Answer 1

Given

P = 5

Q = 25

P1 = 5+1 =6

Q1 =?

SOLUTION:

Ed= (-) ∆Q/∆P×P/Q

1 = (-) ∆Q/1 × 5/25

∆Q= -5

== ∆Q =Q1 - Q

-5=Q1-25

Q1 = 25 - 5

Q1 = 20

The household purchase 20 units at 6 Rs.

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