Question

when price of good decreases to one fourth of the original price its demand increases 3 times more.what is its price elasticity of demand calculate..
​

Answer 1

Answer:

Price elasticity of demand (E  

d

​

)=(−)  

Q

P

​

×  

△P

△Q

​

 

Here,P=Rs.4; P  

1

​

=Rs.5;

△P=P  

1

​

−P=Rs.5−Rs.4=Rs.1

Q=25 units ; Q  

1

​

 = 20 units ; $$

△Q=Q  

1

​

−Q=(20−25) units = (−)5 units

E  

d

​

=(−)  

25

4

​

×  

1

−5

​

Explanation: