Question

Price elasticity of demand of a good is (-)1. When its price per unit falls by one rupee, its de from 16 to 18 units. Calculate the price before a change

Answer 1

Given that

`Q_1 = 16`

`Q_2 = 18`

`P_2 = -1`

As we know that

`Q = Q_2 - Q_1 = 18 - 6 = 2`

`E_d = (DeltaQ)/Q xx P/(DeltaP)`

`-1 = 2/16 xx P/((-1))`

`-1 = ((-P))/8`

`P_1 = 8`

Thus,price before change is Rs 8