1.Price of a commodity increases from ₹ 10 to ₹ 12 per unit and the price elasticity of demand is -0.5. The quantity demanded at initial price was 500 units. What will be the new quantity demanded?
(1 Point)
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1.Price of a commodity increases from ₹ 10 to ₹ 12 per unit and the price elasticity of demand is -0.5. The quantity demanded at initial price was 500 units. What will be the new quantity demanded?
(1 Point)
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Supposing the price (P) before change in demand =Rs.X.
Price elasticity of demand (E
d
)=(−)
Q
P
×
△P
△Q
Here, △P=Rs.5;△Q=(−)5 units
P=Rs.X;Q=100 units and E
d
=1.2
Price elasticity of demand (E
d
)=(−)
Q
P
×
△P
△Q
=1.2
Or, (−)
100
X
×
5
−5
=1.2
Or,
100
X
=1.2
Or, X=1.2×100=120
Price before change in demand =Rs.120.