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MICROECONOMICS CH : 6 PRICE ELASTICITY OF DEMAND — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMICROECONOMICS CH : 6 PRICE ELASTICITY OF DEMAND3 Marks
Question
The demand by a consumer for a commodity declines by 10 per cent when its price increases from ₹5 to ₹6 per unit. What is the price elasticity of demand of the commodity?
✓

Answer

Percentage change in price = $\frac{\Delta P}{P} \times 100=\frac{6-5}{5} \times 100=\frac{1}{5} \times 100=20 \%$
Percentage change in quantity demanded = (-) 10%
$\begin{aligned} \text{Price elasticity of demand}\left( E _{ d }\right) & =(-) \frac{\text { Percentage change in quantity demanded }}{\text { Percentage change in price }} \\ & =(-) \frac{-10 \%}{20 \%}=0.5\end{aligned}$
Price elasticity of demand = 0.5.

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