# when the price of a commodity falls by 20% , it's demand rises from 400 units to 500 units . calculate it's price elasticity of demand

Price elasticity = $\frac{Percentageinquantity}{Percentagechangeinprice}$

Percentage change in quantity = $\frac{500-400}{400}\times 100=25$

Price elasticity = $\frac{25}{20}=1.25$

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