When price of a commodity is Rs. 10 per unit, its demand is 100 units. When the price falls to Rs. 8 per unit, demand expands to 150 units. Calculate price elasticity of demand.
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Answer:
Price of the commodity= Rs 10
Demand = 100 units
New price of commodity=Rs 8
New Demand= 150 units
Price Elasticity of Demand = %age change in qd
÷%age change in price
= (-)50/(-)20
= 2.5
Explanation:
percentage change in quantity demanded
= 50/100 *100
=50%
percentage change in price = -2/10 * 100
= -20%
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