as the price of a commodity rises from 10 to 12,its demand falls from 100 units to 50 units.calculate elasticity of demand.
a).4 b).3
c).1 d).2
as the price of a commodity rises from 10 to 12,its demand falls from 100 units to 50 units.calculate elasticity of demand.
a).4 b).3
c).1 d).2
A IS THE ANSWER.
% CHANGE IN QTY/% CHANGE IN PRICE.
=20/50 =0.4
The Price Elasticity of Demand (commonly known as just price elasticity) measures the rate of response of quantity demanded due to a price change. The formula for the Price Elasticity of Demand (PEoD) is:
PEoD = (% Change in Quantity Demanded)/(% Change in Price)
The answer to the question you have given is 2.5.
The Price elasticity shows that demand is Price Elastic (sensitive to price changes).
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