Question
For a commodity, $\frac{\Delta P }{ P }=-0.2$, and elasticity of demand = -0.5. Find quantity demanded after a fall in price when initially it was 60 units.
✓
Answer
Given, $\frac{\Delta P }{ P }=(-) 0.2 ; E _{ d }=-0.5$
Initial quantity demanded (Q)=60 units
Elasticity of demand $\left(E_d\right)=\frac{P}{Q} \times \frac{\Delta Q}{\Delta P}=\frac{\Delta Q}{Q} \times \frac{P}{\Delta P}$$\begin{aligned}-0.5 & =\frac{\Delta Q}{60} \times \frac{1}{0.2} \\0.5 & =\frac{\Delta Q}{12} \\\Delta Q & =6 \\Q_1 & =Q+\Delta Q \\& =60+6=66\end{aligned}$
New quantity = 66 units.
Initial quantity demanded (Q)=60 units
Elasticity of demand $\left(E_d\right)=\frac{P}{Q} \times \frac{\Delta Q}{\Delta P}=\frac{\Delta Q}{Q} \times \frac{P}{\Delta P}$$\begin{aligned}-0.5 & =\frac{\Delta Q}{60} \times \frac{1}{0.2} \\0.5 & =\frac{\Delta Q}{12} \\\Delta Q & =6 \\Q_1 & =Q+\Delta Q \\& =60+6=66\end{aligned}$
New quantity = 66 units.
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