The price of a commodity is Rs. 20 and the quantity demanded at this price is 200 units. If the price falls to Rs. 16 and the quantity demanded increases to 280 units, calculate the price elasticity
| A. | 1.6 |
| B. | 2 |
| C. | 1.9 |
| D. | 1.3 |
Answer : B Explanation : Price Elasticity of Demand = (ΔQ/ ΔP) * P/Q where Q is original price and P is original Quantity , ΔQ is change in price and ΔP is change in quantity here Q= 200 ΔQ= 280-200=80 P = 20 ΔP=20-16=4 Putting values in formula (ΔQ/ ΔP) * P/Q we get (80/4) *( 20/200 ) = 2
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Option: A Explanation : Explanation will come here. Explanation will come here. Explanation will come here. Explanation will come here. Explanation will come here. |
