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Question
The price of milk rises from ₹ 26.00 to ₹ 30.00 per litre and its demand falls from four litres per day to two litres per day. Calculate the elasticity demand for milk.
Solution
| Price (₹) | Demand (Lt.) |
| 26 | 4 |
| 30 | 2 |
Ed = `(ΔQ)/(ΔP)xxP/Q`
= `2/4xx26/4`
= 3.25
There is a high elasticity of demand for milk.
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