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Price elastic...

Question

Price elasticity of demand of a good is $(-) 1$ . Calculate the percentage change in price that will rise the demand from $20$ units to $30$ units.

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Solution

Given, $E_{d} = (-) 1$
$Q = 20 u n i t s; Q_{1} = 30 u n i t s; △ Q = Q_{1} - Q = (30 - 20) u n i t s = 10 u n i t s$
Percentage change in quantity demanded $= \frac{△ Q}{Q} \times 100 = \frac{10}{20} \times 100 = 50 %$
Price elasticity of demand $(E_{d}) = (-) \frac{Percentage change in quantity demanded}{Percentage change in price}$
$- 1 = \frac{50 %}{Percentage change in price}$
$∴$ Percentage change in price $= (-) 50 %$ .
Percentage change in price $= (-) 50 %$ .

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