Question

When Price Of a good rises from Rs. 12 to Rs. 14 per unit, Demands falls by 10 unit. price Elasticity of demand is (-)2.5. Calculate demand before price change.​

Answer 1

We are given,
Percentage fall in demand =20
Initial Price =10
New Price =12

% Increase in Price =
10
2
​
×100=20%
We know,
e
d
​
=−
%change in price
%change in Demand
​
=−
20
20
​
=−1
Now, if price rises from 10 to 13
% Change in price −
10
3
​
×100=30%
So,
% Change in Demand =% change in Price ×e
d
​
=30×−1=−30
So, we can say that if the price rises from Rs. 10 to Rs. 13, i.e by 30%, then the demand will fall by 30%. This is because the good follows unitary elasticity. I did it on 10,12 pls find 12,14 I did not get it