When the price of a product increases by 5% and the quantity demanded of the product changes from 1 500 to 1 200, what is the price elasticity of demand of the product? (Ignore the negative sign and round off to 2 decimal places)
Price elasticity of demand= percentage change in quantity demanded divided by the percentage change in price.
Here, percentage change in quantity demanded "=\\frac {1200-1500}{1500}\\times 100" "=-20%" %
Price elasticity of demand "=\\frac{-20}{5}=-4.00""= 4.00"
The percentage change in quantity demanded is to a larger extent as compared to percentage change in price.
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