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Question
A consumer buys 30 units of a good at a price of the Rs10per unit. The price elasticity of demand for the good is (-) 1. How many units will the consumer buy at a price of Rs 9 per unit? Calculate.
Solution
Given that
`Q_1` = 30
`Q_2` = ?
`P_1` = Rs 10
`P_2` = 9
`e_d = -1`
`E_d = (DeltaQ)/Q xx P/(DeltaP)`
`-1 = (Q_2 - Q_1)/Q_1 xx P/(DeltaP)`
`-1 = (Q_2 - 30)/30 xx 10/(-1)`
`3 = Q_2 - 30`
`Q_2 = 33`
Hence, the consumer will buy 33 units of the good at a price of Rs 9.
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