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.
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
Solution for 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. concept: Factors Affecting Price Elasticity of Demand. For the courses CBSE (Arts), CBSE (Commerce)