The price elasticity of demand of Good X is half the price elasticity of demand of Good Y. A 25% rise in price of good Y reduces its demand from 400 to 300 units. Calculate percentage change in demand of Good X when its price falls from Rs 10 to Rs 8 per unit
ep1= 1/2 ep2............1
% change in price = 25 %
% change in demand = del dd/ dd * 100
= 100/400 * 100
= 25%
ep2 = % change in price / % change in demand
= 25 / 25
= 1
from 1 = ep1 = 1/2
% change in price = del p/p * 100
= 2/10 * 100
= 20 %
ep1 = % change in price / % change in demand
1/2 = 20 / % change in demand
therefore % change in demand = 40%
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