Price of the commodity increases from $R s . 50$ to $R s . 60$ per unit. Quantity demanded initially was $200$ units. What should be the new quantity so that elasticity of demand is established to be unitary?

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Solution

$P = R s . 50$ ; $P_{1} = R s . 60;$
$△ P = P_{1} - P$ = $R s . 60 - R s . 50 = R s . 10$
$Q = 200$ units; $E_{d}$ =1
We know,
Price elasticity of demand $(E_{d}) = (-) \frac{P}{Q} \times \frac{△ Q}{△ P}$
1= $(-) \frac{50}{200} \times \frac{△ Q}{10}$
$1 = (-) \frac{△ Q}{40}$
$△ Q = (-) 40$
$Q_{1} = Q + △ Q$
New quantity = $200 + (-) 40$
= $200 - 40 = 160$
In order to get unitary elasticity, new quantity should be $160$ units.

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Price of the commodity increases from Rs.50 to Rs.60 per unit. Quantity demanded initially was 200 units. What should be the new quantity so that elasticity of demand is established to be unitary?

P=Rs.50; P1=Rs.60;△P=P1−P= Rs.60−Rs.50=Rs.10Q=200 units; Ed =1 We know, Price elasticity of demand (Ed)=(−)PQ×△Q△P1= (−)50200×△Q101=(−)△Q40△Q=(−)40Q1=Q+△QNew quantity = 200+(−)40 =200−40=160In order to get unitary elasticity, new quantity should be160 units.

Price of the commodity increases from $R s . 50$ to $R s . 60$ per unit. Quantity demanded initially was $200$ units. What should be the new quantity so that elasticity of demand is established to be unitary?