A consumer buys 18 units of a good at a price of Rs. 9 per unit. The price elasticity of demand for the good is (-) 1. How many units will the consumer buy at a price of Rs. 10 per unit ?

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Solution

Given,

P= Rs. 9; $P_{1} = R s . 10$ ; $Δ P = P_{1} - P = R s . 10 - R s . 9 = R s .1$

Q = 18 units; $Q_{1} = ?$ ; $E_{d} = - 1$

Price elasticity of demand

$(E_{d}) = \frac{P}{Q} \times \frac{Δ Q}{Δ P}$

$- 1 = \frac{9}{18} \times \frac{Δ Q}{1}$

$- 1 = \frac{Δ Q}{2}$

$Δ Q = - 2$

Now, $Δ Q = Q_{1} - 18$

$\Rightarrow - 2 = Q_{1} - 18$

$\Rightarrow Q_{1} = 18 - 2 = 16$

Consumer will buy 16 units at a price of Rs. 10 per unit.

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A consumer buys 18 units of a good at a price of Rs. 9 per unit. The price elasticity of demand for the good is (-) 1. How many units will the consumer buy at a price of Rs. 10 per unit ?

Given, P= Rs. 9; P1=Rs. 10; ΔP=P1−P=Rs. 10−Rs. 9=Rs.1 Q = 18 units; Q1=?; Ed=−1 Price elasticity of demand (Ed)=PQ×ΔQΔP −1=918×ΔQ1 −1=ΔQ2 ΔQ=−2 Now, ΔQ=Q1−18 ⇒−2=Q1−18 ⇒Q1=18−2=16 Consumer will buy 16 units at a price of Rs. 10 per unit.