Question

When the price of a commodity falls by र 2 per unit, its quantity demanded increases by 10 units. Its price elasticity of demand is (-)l. Calculate its quantity demanded at the price before change which was र 10 per unit.

Solution

increment straight p equals negative 2 semicolon space space space space increment straight q space equals space 10 semicolon space space straight p space equals 10 semicolon space space space eD space equals space minus 1 space space space space space space space space space left parenthesis given right parenthesis eD equals fraction numerator increment straight q over denominator increment straight p end fraction cross times straight p over straight q minus 1 equals fraction numerator 10 over denominator negative 2 end fraction cross times 10 over straight q space space or space space space 2 straight q equals 100 space space space space or space space space straight q equals 100 over 2 equals 50

Quantity demanded before change in price = 50 units.

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