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# A 5 Percent Fall in the Price of a Good Raises Its Demand from 300 Units to 318 Units. Calculate Its Price Elasticity of Demand. - CBSE (Arts) Class 12 - Economics

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ConceptFactors Affecting Price Elasticity of Demand

#### Question

A 5 percent fall in the price of a good raises its demand from 300 units to 318 units. Calculate its price elasticity of demand.

#### Solution

Given, the initial quantity Q1 = 300
New quantity Q2 = 318
So, ΔQ = 310 - 300 = 18
Now, percentage fall in price =(ΔP)/Pxx100 = (-)5%
We know,
E_d=(-)((ΔQ)/Qxx100)/((ΔP)/Pxx100)=(-)(18/300xx100)/((-)5)=(-) 6/((-)5)=1.2
Thus, price elasticity of demand is 1.2

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#### APPEARS IN

Solution A 5 Percent Fall in the Price of a Good Raises Its Demand from 300 Units to 318 Units. Calculate Its Price Elasticity of Demand. Concept: Factors Affecting Price Elasticity of Demand.
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