Question

when the price of a pen increased from Rs.20 to Rs.22 the quantity of pens demanded decreased from 100 to 87 what is the price elasticity of demand for pens<br />​

Answer 1

Answer:

Given, P=Rs.10; P

1

= Rs.8;

△P=P

1

−P=Rs.8−Rs.10=(−)Rs.2

E

d

=(−)2

Percentage change in price =

P

△P

×100

=

10

−2

×100=(−)20 per cent

Price elasticity of demand (E

d

)=

Percentagechangeinprice

Percentagechangeinquantitydemanded

−2=

−20%

Percentagechangeinquantitydemanded

Percentage change in quantity demanded =(−)2×(−)20 per cent = 40 per cent

Percentage increase in quantity demanded = 40%.

Explanation:

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