Question

The price for a good has reduced from 820 rub. to 790 rub. The demand has increased from 2900 units to 3350 units.. Calculate the price elasticity of demand? 

Answer 1

$Price Elasticity of Demand = \frac{percentage change in quantity demanded}{percentage change in price}$$Change in quantity demanded = 3350-2900 = 450$

%change in quantity demanded = $\frac{450}{2900 }×100 = 15.52$

$Change in price = 790-820 = -30$

Percentage change in price = $\frac{-30}{820}×100 =- 3.66$

$Price elasticity of demand = \frac{15.52}{-3.66}$

$= -4.24$