Question

The prices and quantities demanded of a commodity are given below. On this basis,

find out the price elasticity of demand.

Price (in Rs.) 10 20

Demand(units) 20 15​

Answer 1

Answer:

Price of X (Rs. per unit) Total Expenditure (Rs.) Demand (Units)

4

5 600

525

4

600

=150

5

525

=105

Here, P=Rs.4; P

1

=Rs.5;

△P=P

1

−P= Rs.5−Rs.4= Rs.1

Q=150 units; Q

1

=105 units; $$

△Q=Q

1

−Q= (105−150) units =(−)45 units

Price elasticity of demand(E

d

)=(−)

Q

P

×

△P

△Q

=(−)

150

4

×

1

−45

=1.2

Price elasticity of demand =1.2