Question

when price of a commodity falls by 25%its demand rises from 100 units to 150 units calculate price elasticity of demand by percentage method​

Answer 1

Explanation:

Given, percentage change in price =(−)10%

Q=150 units;Q

1

=180 units;△Q=Q

1

−Q=(180−150)units=30 units

Percentage change in quantity demanded =

Q

△Q

×100

=

150

30

×100=20%

Price elasticity of demand (E

d

)=(−)

Percentage change in price

Percentage change in quantity demanded

=(−)

−10%

20%

=2

When demand rises from 150 to 210 units:

E

d

=2

Q=150 units;Q

1

=210 units;△Q=Q

1

−Q=(210−150)units=60 units

Percentage change in quantity demanded =

Q

△Q

×100

=

150

60

×100=40%

Price elasticity of demand (E

d

)=(−)

Percentage change in price

Percentage change in quantity demanded

2=(−)

Percentage change in price

40%

Percentage change in price =

2

−40%

=20%

Price elasticity of demand =2.

Percentage fall in price =20%.

Answer 2

Given, percentage change in price =(−)10%
Q=150 units;Q
1
​
=180 units;△Q=Q
1
​
−Q=(180−150)units=30 units
Percentage change in quantity demanded =
Q
△Q
​
×100
=
150
30
​
×100=20%
Price elasticity of demand (E
d
​
)=(−)
Percentage change in price
Percentage change in quantity demanded
​

=(−)
−10%
20%
​
=2
When demand rises from 150 to 210 units:
E
d
​
=2
Q=150 units;Q
1
​
=210 units;△Q=Q
1
​
−Q=(210−150)units=60 units
Percentage change in quantity demanded =
Q
△Q
​
×100
=
150
60
​
×100=40%
Price elasticity of demand (E
d
​
)=(−)
Percentage change in price
Percentage change in quantity demanded
​

2=(−)
Percentage change in price
40%
​

Percentage change in price =
2
−40%
​
=20%
Price elasticity of demand =2.
Percentage fall in price =20%.