Sum

The price of a commodity increase from ₹ 10 to ₹ 14. Calculate percentage fall in quantity demanded of the commodity if the coefficient of price elasticity of demand is (−) 1.25.

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#### Solution

**Given: **

P_{1 }= 10

P_{2 }= 14

Price Elasticity of Demand = 1.25

Percentage fall in quantity demanded = ?

Percentage rise in price = `("P"_2-"P"_1)/("P"_1) xx 100 = (14-10)/(10) xx 100 = 40%`

The elasticity of Demand = `" Percentage fall in quantity demanded"/"Percentage in price"`

(-) 1.25 = `"Percentage fall in Quantity Demanded"/(40%)`

Percentage Change in Quantity Demanded = 1.25 x 40% = 50%

Concept: Measurement of Elasticity of Demand

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