Question

At Rs. 26 per unit, the demand for a commodity is 30 units. If the price increases from Rs. 26 to Rs. 30 per unit, the demand decreases to 15 units. Calculate the price elasticity of demand.

Answer 1

Given,$P=Rs.26$; $P_1=Rs.30;$

$△P=P_1-P$ = $Rs.30-Rs.26=Rs.4$
$Q=30$ units; $Q_1=15$ units; $

$△Q=Q_1-Q=(15-30)$ units = $(-)15$ units
Price elasticity of demand $\left(E_d\right)=(-)\frac{P}{Q}\times \frac{△Q}{△P}$
=$(-)\frac{26}{30}\times \frac{-15}{4}=3.25$