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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. - Economics

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= 10
P= 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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