Question
A consumer spends Rs. 100 on a good priced at Rs. 4 per unit. When price falls by 50 per cent, the consumer continues to spend Rs. 100 on the good. Calculate price elasticity of demand by percentage method.
| Price | Exp. | Demand |
| 4 | 100 | 25 |
| 2 | 100 | 50 |
$\text{E}_{p}=\frac{\text{P}}{\text{Q}}\times\frac{\triangle\text{Q}}{\triangle\text{P}}$
$=\frac{4}{25}\times\frac{25}{-2}$
$= -2$
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