Question-
Price elasticity of Demand of a good is (-) 2.The consumer buys a certain quantity of this good at a price of ₹;8 per unit. When the price falls, he buys 50% more quantity. What is the new price?
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Answer: The negative sign is ignored, thus the Ed = 2
% change in quantity = 50% , % change in price = x , change in price = y
Ed = % change in quantity / % change in price = 50/x
% Change in price = 25
%Change in price = change in price / original price x 100 = y / 8 x 100
Change in price = 2
New price - original price = change in price
New price = Change in price + original price - 8 +2 = 10
Explanation:
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