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Question

A consumer buys 30 units of a good at a price of Rs.10 per unit. Price elasticity of demand for the good is ()1. How many units the consumer will buy at a price of Rs.9 per unit? Calculate.

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Solution

Given, P=Rs.10;P1=Rs.9;P=P1P=Rs.9Rs.10=()Rs.1
Q=30 units;Q1=?
Ed=()1
Price elasticity of demand (Ed)=PQ×QP
1=1030×Q1
Q=3
Now, Q=Q1Q
3=Q130
Q1=30+3=33.
Consumer will buy 33 units at a price of Rs.9 per unit.

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