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| 1. |
The demand for a good falls to 240 units in response to the rise in price by ₹.2. If the original demand was 300 units at the price of ₹.20, calculate the price elasticity of demand. |
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Answer»
Price elasticity of Demand Ed = \(\frac{\Delta Q}{\Delta P}\times\frac{P}{Q}\) \(=\frac{-60}{2}\times\frac{20}{300}\) = (-) 2 Ed = (-) 2 (Demand is highly elastic as Ed > 1) |
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