Question

When the price of a commodity increases from Rs. 8 to Rs. 9 then the demand decreases by 10%. The price Elasticity of demand is ___________________: (a) 0.8 (b) 0.9 (c) 1 (d) 1.1

Answer 1

Your correct answer is c)

Answer 2

Answer:

0.8 is the correct answer

Given:

• price of a commodity increases from Rs. 8 to Rs. 9
• the demand decreases by 10%

To find:

The price Elasticity of demand

Solution:

Let the percentage change in price be Y.
Y= [Δ price-initial price/ inital price] x 100

Y= 9-8/8 x 100

Y= 1/8 x 100

Y= 12.5

The price Elasticity of demand = percentage change in quantity demanded/ percentage change in price.

The price Elasticity of demand = 10/12.5 = 0.8

Hence, 0.8 is the correct answer.

#SPJ2