the price of good rises from 10 rupees per unit to 11 rupees.as a result its quantity demanded falls by 10 percent.calculate price elasticity of demand?

Dear student. Initial price (P0)= rs. 10. Final price (P1)= rs 11. Percentage change in quantity demanded = - 10. Elasticity of demand (Ed)= (-) % change in quantity demanded/% change in price. Ed= (-) -10/ {( P1- P0)/ P0 }×100. Ed= (-) -10/ {(11-10)/10} ×100. Ed= +10/ 10. Ed= 1. So Price elasticity of demand is +1. Regards

  • 0
What are you looking for?