Answer:
Given, the initial quantity \[{{Q}_{1}}=300\] New quantity \[{{Q}_{2}}=318\] So, \[\Delta Q=318-300=18\] Now, percentage fall in price \[=\frac{\Delta P}{P}\times 100=(-)\,5%\] We know, \[{{E}_{d}}=(-)\frac{\frac{\Delta P}{{{Q}_{1}}}\times 100}{\frac{\Delta P}{P}\times 100}=(-)\frac{\frac{18}{300}\times 100}{(-)\,5}=(-)\frac{6}{(-)\,\,5}=1.2\] Thus, price elasticity of demand is 1.2
You need to login to perform this action.
You will be redirected in
3 sec