Question 4
MediumOriginal questionThe price of a good rises from ₹5 to ₹6 and the quantity demanded falls from 100 to 90 units. What is the price elasticity of demand?
Show the answer and explanation
CorrectNot quiteAnswer A
Correct answer: A
Explanation
% change in quantity = −10 ÷ 100 × 100 = −10%.
% change in price = 1 ÷ 5 × 100 = 20%.
eₚ = 10 ÷ 20 = 0.5: demand is inelastic.
- Concept
- Computing elasticity from a price rise
- Typical timeTypical
- 70 s
- Your timeYours
- —
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