Question

Price elasticity of demand of a good is $(-)1$. When its price per unit falls by one rupee, its demand rises from $16$ to $18$ units. Calculate the price before change.

Answer 1

Given, $P=?;△P=(-)Rs.1$
$Q=16units;Q_1=18units;△Q=Q_1-Q=(18-16)units=2units$
$E_d=(-)1$
Price elasticity of demand $\left(E_d\right)=\frac{P}{Q}\times \frac{△Q}{△P}$
$-1=\frac{P}{16}\times \frac{2}{-1}$
$-8=-P$
Thus, $P=8$
Price before change $=Rs.8$.