Question

The price of a commodity decreases from Rs 6 to Rs 4 and his demand for goods increases from 10 units to 15 units, Find the coefficient of price elasticity.

• A. 1.5
• B. 2.5
• C. -1.5
• D. 0.5

Answer 1

The correct option is C -1.5

Here,

$Q=10,Q_1=15,P=Rs.6$ and $P_1=Rs.4$

$\Delta Q=Q_1-Q=15-10=5$

$\Delta P=P_1-P=Rs.(4-6)=-2$

We know, $E_d=\frac{\Delta Q/Q}{\Delta P/P}$

$\Rightarrow$ $E_d=\frac{5/10}{-2/6}$

$\Rightarrow$ $E_d=\frac{-3}{2}=-1.5$

$\therefore$ The required coefficient of price elasticity $-1.5$