Question

What is the price elasticity of demand when the price of the commodity changes from ₹5 to ₹4 and the demand changes from 10 units to 15 units.

[1 mark]

• A. 3.5
• B. 4
• C. (-)2.5
• D. 1

Answer 1

The correct option is C (-)2.5

Ed = Percentage of change in quantity demanded/Percentage of change in price

Percentage of change in quantity demanded = [(15-10)/10] × 100 = 50%
Percentage of change in price = ((4-5)/5) × 100 = (-)20%
Ed = 50%/(-)20%
Ed = (-)2.5