Question

A consumer buys 18 units of a good at a price of Rs 9 per unit. The price elasticity of demand for the good is (–) 1. How many units the consumer will buy at a price of Rs 10 per unit? Calculate.

Answer 1

Given that

Q₁= 18

Q₂= ?

P₁ = Rs9

P₂ = Rs10

E_d = -1

`E_d=(DeltaQ)/Qxxp/(DeltaP)`

`-1=(Q_2-Q_1)/Q_1xxP/(P_2-P_1)`

`-1=((Q_2-18))/18xx9/(10-9)`

`-1=(Q_2-18)/18xx9/1`

-2=Q₂-18

-2+18=Q₂

Q₂=16

Therefore, the consumer will buy 16 units of the good at a price of Rs 10.