Question

Calculate percentage change in quantity demanded of a commodity as a result of 20% fall in its price. Assume that the commodity has a price elasticity of (–)3.

Answer 1

Let PE reps Price Elasticity 

QD - Quantity demanded 

PC - Price change 

price elasticity = Quantity demanded /Price change   

$= P.E = QD/PC$    

  Therefore

$QD=PC/PE$

$QD=?$  

$PE=(-)3$

$PC =20$ %

Applying the formula 

$QD=PC/PE$

$= QD=-3/20= -60$% Or 60%