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Question
A consumer buys 18 units of a good at a price of Rs 9 per unit. The price elasticity of demand for the good is (–) 1. How many units the consumer will buy at a price of Rs 10 per unit? Calculate.
Solution
Given that
Q1= 18
Q2= ?
P1 = Rs9
P2 = Rs10
Ed = -1
`E_d=(DeltaQ)/Qxxp/(DeltaP)`
`-1=(Q_2-Q_1)/Q_1xxP/(P_2-P_1)`
`-1=((Q_2-18))/18xx9/(10-9)`
`-1=(Q_2-18)/18xx9/1`
-2=Q2-18
-2+18=Q2
Q2=16
Therefore, the consumer will buy 16 units of the good at a price of Rs 10.
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