Question

suppose demand of a commodity is 25 when price is ₹ 4. As price rises to ₹5, quantity of demand falls to 20. Calculate elasticity of demand.​

Answer 1

Answer:

Explanation: ed=Elasticity of demand

=(change in quantity demanded/initial quantity demanded) /(change in price/initial price)

Initial quantity demanded=25

Initial price =4

Final quantity demanded =20

Final price = 5

Change in quantity demanded =(20-25)= (-5)

Change in price =(5-4)

Change = ( final - initial)

Ed = (-5/25)/(1/4) =( - 1/5)/(1/4)

= - ( 4 / 5) = - 0.8 ( answer)

Answer 2

Explanation:

Consider the demand for a good. At price, Rs. 4, the demanded for the goods is 25 units. Suppose price of the good increases to Rs. 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity.

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ANSWER

Price elasticity of demand (Ed)=(−)QP×△P△Q

Here,P=Rs.4; P1=Rs.5;

△P=P1−P=Rs.5−Rs.4=Rs.1

 Q=25 units ; Q1 = 20 units ; $$

△Q=Q1−Q=(20−25) units = (−)5 units

Ed=(−)254×1−5

=0.8.