Question

the demand function of commodity X
is ginen as Qx = 20-2px Calculate its
price elasticity of demand when price
falls from Rs .5 to Rs 3.​

Answer 1

Answer:

The price elasticity of demand is 2 % or 0.02

Explanation:

Demand function

qx = 20 - 2px

When the price is Rs 5

qx = 20 - 2 (5)

   = 20 - 10

   = 10

When price falls to Rs 3 from Rs 5, then quantity demand of x unit is:

qx = 20 - 2(3)

   = 20 - 6

   = 14

The formula of price elasticity of demand is:

= % change in quantity demanded / % change in price

= (14 - 10)% / (5 -3)%

= 4 / 2

= 2 % or 0.02

Explanation:

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