A consumer buys 100 units of a good at a price of Rs. 5 per unit. When price changes he buys 140 units. What is the new price if price elasticity of demand is - 2 ?

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Solution

$E = \frac{P}{Q} \times \frac{△ Q}{△ P}$

$- 2 = \frac{5}{100} \times \frac{40}{∠ p}$

$- 200 △ P = 200$

$o r △ P = - 1$

$N e w P = P + △ P = 5 + (- 1) = R s 4$

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A consumer buys 100 units of a good at a price of Rs. 5 per unit. When price changes he buys 140 units. What is the new price if price elasticity of demand is - 2 ?

E=PQ×△Q△P −2=5100×40∠p −200 △P=200 or △P=−1 New P=P+△P=5+(−1)=Rs 4

$E = \frac{P}{Q} \times \frac{△ Q}{△ P}$

$- 2 = \frac{5}{100} \times \frac{40}{∠ p}$

$- 200 △ P = 200$

$o r △ P = - 1$

$N e w P = P + △ P = 5 + (- 1) = R s 4$