Question

Calculate elasticity of demand on the basis of the following data.

Price (Rs.)	Quantity (Kg)
10	20
20	15

1. Calculate the elasticity of demand.
2. Is the demand elastic or inelastic?

Answer 1

(a)

E_d = `(ΔQ)/(ΔP)xxP/Q`

Here, ΔQ = 5, ΔP = 10

Q = 20, P = 10

By putting these values:

E_d = `5/10xx10/20`

= `1/4`

= 0.25

(b)

Demand here is less elastic.