Question

Price elasticity of demand of a good is (-) 1. At a price the consumer buys 60 units of the good. How
many units will the consumer buy if the price falls by 10 per cent?
[Ans. New quantity = 66 units]​

Answer 1

price elasticity of demand = -1

original demand = 60

new demand =  x

change in demand = x-60

% change in price =  -10 %

-1  = x-60 ÷ 60 x 100   / 10

10 = x-60 /3 x 5

10 = 5x-300/3

30 = 5x - 300

30 + 300 = 5x

330 = 5x

x = 330/5

x = 66

therefore , the consumer will buy 66 units if the price falls by 10 %