A consumer purchased 10 units of a commodity when its price was Rs 5 per unit. He purchases 12 units of the commodity when price falls to Rs 4 per unit. Calculate the price elasticity of demand for the commodity.

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Solution

Given: $Q - 10, Q_{1} = 12, P = 5, P_{1} = 4$
$Δ P = (4 - 5) = - 1, Δ Q = (12 - 10) = 2$
$E_{d} = (- 1) \frac{P}{Q} * \frac{Δ Q}{Δ P}$
$= (-) \frac{5}{10} * \frac{2}{- 1} = 1$
$E_{d} = 1$ Unitary elastic demand.

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A consumer purchased 10 units of a commodity when its price was Rs 5 per unit. He purchases 12 units of the commodity when price falls to Rs 4 per unit. Calculate the price elasticity of demand for the commodity.

Given: Q−10,Q1=12,P=5,P1=4ΔP=(4−5)=−1,ΔQ=(12−10)=2Ed=(−1)PQ∗ΔQΔP=(−)510∗2−1=1Ed=1 Unitary elastic demand.

Given: $Q - 10, Q_{1} = 12, P = 5, P_{1} = 4$
$Δ P = (4 - 5) = - 1, Δ Q = (12 - 10) = 2$
$E_{d} = (- 1) \frac{P}{Q} * \frac{Δ Q}{Δ P}$
$= (-) \frac{5}{10} * \frac{2}{- 1} = 1$
$E_{d} = 1$ Unitary elastic demand.