Question

when the price of commodity increases by 40% and its quantity demanded from 150 to 120 units , then the price elasticity of demand for a commodity is -​

Answer 1

FORMULA :-

$ed \: = \frac{percentage \: change \: in \: quantity \: supplied}{percentage \: change \: in \: price}$

percentage change in price of commodity is 40%

initial quantity demanded Q = 150 units

final quantity demanded Q1 = 120 units

%tage change in Quantity demanded =

$\frac{∆Q}{Q}$ .×100

$\frac{ - 30}{150} \times 100$

$= > - 20$

Ed = 20/40

Ed = 1/2 .

elasticity of demand is less than unity.