Question

Price elasticity of demand is found to be $(-)2$. Price falls from $Rs.10$ per unit to $Rs.8$ per unit. Find the percentage increase in quantity demanded.

Answer 1

Given, $P=Rs.10$; $P_1$ = $Rs.8$;

$△P=P_1-P=Rs.8-Rs.10=(-)Rs.2$

$E_d=(-)2$
Percentage change in price = $\frac{△P}{P}\times 100$
=$\frac{-2}{10}\times 100=(-)20$ per cent
Price elasticity of demand $\left(E_d\right)=\frac{Percentagechangeinquantitydemanded}{Percentagechangeinprice}$
$-2=\frac{Percentagechangeinquantitydemanded}{-20\%}$
Percentage change in quantity demanded =$(-)2\times (-)20$ per cent = 40 per cent
Percentage increase in quantity demanded = $40\%.$