Market demand for a good at a price of Rupees 10 per unit. When its price changes, its market demand falls to 50 units.
Price elasticity of demand is -2.


New price of the good.




Price elasticity of demand (PED) measures the responsiveness of the quantity demanded of a good to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

PED = (% Change in Quantity Demanded) / (% Change in Price)

If PED is greater than 1, demand is elastic. If PED is less than 1, demand is inelastic. If PED is equal to 1, demand is unit elastic.

If PED is negative, it means that the demand curve is downward sloping, i.e., as the price of the good increases, the quantity demanded decreases.


Given, market demand at a price of Rupees 10 per unit is 100 units (let's assume).

When the price changes, market demand falls to 50 units.

Using PED formula, we can calculate the percentage change in quantity demanded:

-2 = (% Change in Quantity Demanded) / (% Change in Price)

We know that the percentage change in quantity demanded is -50% (100 units to 50 units).

-2 = (-50%) / (% Change in Price)

% Change in Price = (-50%) / (-2) = 25%

Therefore, the percentage change in price is 25%.

To find the new price, we need to calculate 25% of the original price:

25% of Rs. 10 = Rs. 2.50

New price = Rs. 10 - Rs. 2.50 = Rs. 7.50

Therefore, the new price of the good is Rs. 7.50.


The market demand for a good at a price of Rs. 10 per unit is 100 units. When the price changes, its market demand falls to 50 units. The new price of the good is Rs. 7.50, given the price elasticity of demand is -2.