Question

Question:
If a 15% fall in price of burger leads to a 3% increase in quantity demanded of burger then ep would be (CO2,
Comprehension)

Answer 1

Solution :-

% change in Demand = 3 %

% change in Price = - 15 %

Price Elasticity of Demand (ED)

= % Change in Quantity Demanded/% Change in Price  

⇒ 3 %/- 15 %

= 1/5

= 0.20

Price Elasticity of Demand is 0.20, which is inelastic.

It will not be shown with a negative sign. Here is the clarification for this.

It is important to note that when the price of burger decreases by 1 %, the quantity demanded will be changed by 0.20 %. It means the change in the price will result in a smaller percentage change in the quantity of burger. So, it is not shown with a negative sign.