Question

when price of good falls from rs 15 per unit to rs 12per unit it demand rises by 5% find ED​

Answer 1

Explanation:

$Given, P=Rs.15;P </p><p>1</p><p> </p><p> </p><p> =Rs.12;△P=P </p><p>1</p><p> </p><p> −P=Rs.12−Rs.15=(−)Rs.3$

$Percentage \: change \: in \: price = \frac{ △p \: }{p} \times 100 \: = \frac{ - 3}{15} \times 100 \: = ( - )20 \:\%$

$Percentage \: change \: in \: quantity \: \\ demanded =25\%$

$Price \: elasticity \: of \: demand \: (E </p><p>d</p><p> </p><p> )=$

$( - ) \: \frac{percentage \: change \: in \: quality \: demanded}{percentage \: change \: in \: price}$

$= ( - ) \: \frac{25 \%}{( - ) \: 20\%}$

$= 1.25$

$Price \: elasticity \: of \: demand =1.25.$