Answer to Question #236783 in Economics for Shona

Question

Q1.The price elasticity of Nihar Naturals Sarson Kesh Tel (Marico Product) falls from Rs 50 to Rs 45 per unit and due to this the quantity demanded of the commodity increases from 85 units to 120 units, find out the price elasticity also draw the diagram and mention the type of Price Elasticity

Answer 1

The price elasticity of demand is:

$Ed = \frac{120-85} {45-50} ×\frac{45+50} {120+85} = -3.24.$

So, the demand is elastic.