Question

A consumer buys 30 units of a good at a price of the Rs10per unit. The price elasticity of demand for the good is (-) 1. How many units will the consumer buy at a price of Rs 9 per unit? Calculate.

Answer 1

Given that

`Q_1` = 30

`Q_2` = ?

`P_1` = Rs 10

`P_2` = 9

`e_d = -1`

`E_d =  (DeltaQ)/Q xx P/(DeltaP)`

`-1 = (Q_2 - Q_1)/Q_1 xx P/(DeltaP)`

`-1 = (Q_2 - 30)/30 xx  10/(-1)`

`3 = Q_2 - 30`

`Q_2 = 33`

Hence, the consumer will buy 33 units of the good at a price of Rs 9.