The price elasticity of demand of a good is (-0.5). At a price of Rs. 40 per units its demand is 300 units. At price will its demand increase by 20%. Share with your friends Share 1 Priya Chhabra answered this Ayantika, Given,Ed = -0.5% change in quantity demanded = 20%P1 = Rs 40Let the new price be P2Ed = % change in quantity demanded% change in price-0.5 = 20% change in price% change in price = -40P2 - 4040 × 100 = -40100P2 - 4000 = -1600100P2 = 2400P2 = Rs 24Hence, at a price of Rs 24, demand will increase by 20%. 1 View Full Answer Divyata answered this we are given Ed=0.5 P=40 Q=300 %age change in demand = 20% Ed=%age change in demand / %age change in price 0.5= 20 % / % age change in price therefore % age change in price is 40% that is delta P/P *100=40 delta P/40*100=40 delta P=16 since the demand is increasing the price will decrease so the price at which the demand will increase by 20% is 40-16=24 1
