Question

The price of 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. -0.67
• B. -1.5
• C. 2.5
• D. 1.5

Answer 1

The correct option is B -1.5

Coefficient of price elasticity $=\frac{Percentagechangeinquantitydemanded}{Percentagechangeinprice}$

$\Rightarrow E_d=\frac{\frac{\Delta Q}{Q}}{\frac{\Delta P}{P}}$

$\Rightarrow E_d=\frac{\frac{10-15}{10}}{\frac{6-4}{6}}$

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

$\Rightarrow E_d=\frac{-5\times 6}{10\times 2}=-1.5$

Hence, the correct option is B.