The price of a commodity decreases from 10 to 8 and the quantity demanded of it increases from 25 to 30 units, then the coefficient of price elasticity will be______.
  • a)
    1.00
  • b)
    -1.00
  • c)
    1.5
  • d)
    -1.5
Correct answer is option 'B'. Can you explain this answer?

CA Foundation Question

6 Answers
Divine Novice answered Aug 05, 2018
But I guess negative sign just indicate the negative relationship

Samiksha answered Jun 23, 2018
Well lets solve this step by step.. As it is given in the question original quantity =25 units, new quantity =30 units, so change in quantity =30-25=5 units .. Original price =Rs 10, new price =Rs 8..so,Change in price =8-10=Rs -2...nw price elasticity of demand =change in quantity demand /change in price *original price /original quantity =5/-2*10/25=0 (-) 1..hence Ed =(-) 1 i.e demand is unitary elastic

Divya answered Jun 23, 2018
Put the value in the formula

Alia Athar answered Jul 20, 2019
We never use negative sign in elasticity of demand... answer will be +1

Abhishek Kumar answered Jun 23, 2018
The price elasticity will be - 1,becoz we have DeltaQ=30-25 (Q1-Q2) =5 DeltaP=8-10(p1-p2)=-2 Or p1=10 'q1=25 here formula = Deltaq/deltap *p1/q1 5/-2*10/25=-1 the price elasticity will be unitary elastic

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