Question

When price of a good falls from Rs 15 to Rs 20 per unit its demand rises by 25 % calculate price elasticity of demand ​

Answer 1

Answer:

Explanation:

Given, P=Rs.15;P  

1

​  

=Rs.12;△P=P  

1

​  

−P=Rs.12−Rs.15=(−)Rs.3

Percentage change in price =  

P

△P

​  

×100=  

15

−3

​  

×100=(−)20%

Percentage change in quantity demanded =25%

Price elasticity of demand (E  

d

​  

)=(−)  

Percentage change in price

Percentage change in quantity demanded

​  

 

=(−)  

(−)20%

25%

​  

 

=1.25

Price elasticity of demand =1.25.