Price of a commodity is rupees 20 per unit and it's demand is 300 unit. When price falls to rupees 10 per unit demand rises to 450 unit. Calculate the price elasticity of demand.
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n=(Q1-Qo)÷(Q1+Qo)/(P1-Po)÷(P1+Po)
Po= Initial price
Qo= Initial quantity
P1= New price
Q1= New Quantity
n=(450-300)÷(450+300)/(10-20)÷(10+20)
n=(150÷750)/(-10÷30)
n=0.2/-0.3
n=-0.67
The price elasticity of demand will always be a negative number as it shows the inverse relationship between the price and demand.
Po= Initial price
Qo= Initial quantity
P1= New price
Q1= New Quantity
n=(450-300)÷(450+300)/(10-20)÷(10+20)
n=(150÷750)/(-10÷30)
n=0.2/-0.3
n=-0.67
The price elasticity of demand will always be a negative number as it shows the inverse relationship between the price and demand.
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