Question

When 5% change in the price results 10% change in the quantity demanded. Elasticity of demand will be: a) Ed=1 b) Ed>1 c) Ed<1 d) Ed=0. Answer it quickly please

Answer 1

$\bf\underline{Elasticity \:of \: Demand}$ shows percentage change in quantity demanded due to percentage change in price.

$\bf\green {Answer :-}$

When 5% change in the price results 10% change in the quantity demanded then the elasticity of demand will be $\bf {(b) \:E>1}$ because :

$ed \: = \frac{\% \: change \: in \: qty \: demanded}{\% \: change \: in \: price} \\ \\ ed = \frac{10\%}{5\%} = 2 \\ \\ (hence \: ed > 1)$