Compute price elasticity, At price of Rs. 20 the unit quantity demanded is 300 units. Its

Compute price elasticity

At price of Rs. 20 the unit quantity demanded is 300 units. Its price downs by 10% its quantity demanded rises by 60 units. Compute price elasticity.

Answer:

Given: Rise in Price = 10%

∴ Rise in Quantity = ?Q /Q x 100
= 60/300 x 100
= 20%

∴ ED = (Percentage change in Quantity demanded)/(Percentage change in price)

= 20 /10
= 2

∴ Elasticity is more than unity
∴ ED > 1

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