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# 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)1.00b)-1.00c)1.5d)-1.5Correct answer is option 'B'. Can you explain this answer? Related Test: Test: Theory Of Demand- 3

## CA Foundation Question

By Khushboo Khushi · Jun 22, 2018 ·CA Foundation
Divine Novice answered Aug 05, 2018
But I guess negative sign just indicate the negative relationship

B

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

Put the value in the formula

Alia Athar answered Jul 20, 2019

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