when price of commodity is 10 rs and 50 units are demanded calculate price elasticity of demand of commodity
Answers
Step-by-step explanation:
Given, percentage change in quantity demanded =100%
P=Rs.10;P
1
=Rs.5;△P=P
1
−P=Rs.5−Rs.10=(−)Rs.5
Percentage change in price =
P
△P
×100=
10
−5
×100=(−)50%
Elasticity of demand (E
d
)=
Percentage change in price
Percentage change in quantity demanded
=(−)
−50%
100%
=2
When quantity demanded falls by 50%.
E
d
=2
Elasticity of demand (E
d
)=
Percentage change in price
Percentage change in quantity demanded
2=(−)
Percentage change in price
−50%
Percentage change in price =(−)
2
−50%
=25%
When price of the commodity rises by 25%, new price =Rs.10+Rs.2.5(25% of 10)=Rs.12.5
Elasticity of demand =2.
New price =Rs.12.5.
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