when price of a commodity reduces from Rs 5 per unit to Rs 4 per unit , expenditure on the commodity reduces from Rs 60 to Rs 40 . find price elasticity of demand .
Given:
Initial Expenditure (E0) = Rs 60
Initial Price (P0) = Rs 5
Final Expenditure (E1) = Rs 40
Final Price (P1) = Rs 4
Elasticity of demand = ?
Note- I think there is something wrong with the question, since elasticity of demand is coming out to be positive. Please cross-check. If everything is fine, then this is the case of Giffen good, since as price falls, quantity demanded also falls.
Initial Expenditure (E0) = Rs 60
Initial Price (P0) = Rs 5
Final Expenditure (E1) = Rs 40
Final Price (P1) = Rs 4
Elasticity of demand = ?
Note- I think there is something wrong with the question, since elasticity of demand is coming out to be positive. Please cross-check. If everything is fine, then this is the case of Giffen good, since as price falls, quantity demanded also falls.