Question

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The demand for a goods falls to 500 units in response to rise in price by Rs.10. If the original demand was 600 units at the price of Rs. 30, calculate price elasticity of demand.

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Answer 1

Answer:

Given :-

Q 1 = 600, P1 = 30

Q2= 500 , P 2= 10

Explanation:

we know that

Ed= (Q2-q1)/ Q1 * p1 / (p2-p1)

Ed= 500-600/ 600 * 30/ 10 -30

Ed= - 100/600 *30/ -20

Ed= 1/6 *3/2 = 1/4 = 0.25

Hope this is correct. I haven't solved it on paper, do let me know if u find any error.