Question

The price elasticity of demand for commodity - $X$ is known to be twice that of commodity - $Y$. Price of $X$ falls by $5$ per cent while that of commodity - $Y$ rises by $5$ per cent. What is the percentage change in quantities of $X$ and $Y$?

Answer 1

If $E_d=1$ for commodity - $Y$
$E_d=2$ for commodity - $X$
$\therefore 5$ per cent rise in price of $Y$ should mean $5$ per cent decrease in quantity of $Y$ and $5$ per cent fall in price of $X$ should mean $10$ per cent in quantity of $X$.
Quantity of $X$ will increase by $10$ per cent, and quantity of $Y$ will decrease by $5$ per cent.