Question

If the price of goods increased from 1.5 to 2 dollars, and the volume of demand reduced from 1,000 to 900 units. the coefficient of price elasticity is?

Answer 1

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.

$$E _ {d} = \frac {\frac {P _ {1} + P _ {2}}{2}}{\frac {Q _ {d _ {1}} + Q _ {d _ {2}}}{2}} \times \frac {\Delta Q _ {d}}{\Delta P} = \frac {P _ {1} + P _ {2}}{Q _ {d _ {1}} + Q _ {d _ {2}}} \times \frac {\Delta Q _ {d}}{\Delta P}$$

$\mathrm{Ed} = (1.5 + 2) / (1000 + 900) * (900 - 1000) / (2 - 1.5) = -3.5 / 1900 * 100 / 0.5 = -7 / 19$, so the demand is inelastic or relatively inelastic.