Question

Price elasticity of demand of a good is (-)1. When its price per unit falls by one rupee, its de from 16 to 18 units. Calculate the price before a change

Answer 1

Given that

${\displaystyle Q_1=16}$

${\displaystyle Q_2=18}$

${\displaystyle P_2=-1}$

As we know that

${\displaystyle Q=Q_2-Q_1=18-6=2}$

${\displaystyle E_d=\frac{\Delta Q}{Q}\times \frac{P}{\Delta P}}$

${\displaystyle -1=\frac{2}{16}\times \frac{P}{(-1)}}$

${\displaystyle -1=\frac{(-P)}{8}}$

${\displaystyle P_1=8}$

Thus,price before change is Rs 8