Question

For a commodity, $△P/P=-0.2$, and elasticity of demand $=-0.5$. Find quantity demanded after a fall in price when initially it was $60units$.

Answer 1

Given, $\frac{△P}{P}=(-)0.2;E_d=-0.5$
Initial quantity demanded $\left(Q\right)=60units$
Elasticity of demand $\left(E_d\right)=\frac{P}{Q}\times \frac{△Q}{△P}=\frac{△Q}{Q}\times \frac{P}{△P}$
$-0.5=\frac{△Q}{60}\times \frac{1}{-0.2}$
$0.5=\frac{△Q}{12}$
$△Q=6$
$Q_1=Q+△Q=60+6=66$
New quantity $=66units$.