Price elasticity of demand of a good is ( ) 1 When its price per unit falls by one - Economics - Theory of Consumer Behaviour

Question

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

Sanjari Kalantri · Accepted Answer

Dear Student,
Given: Price elasticity of demand (ed) = (-)1, ∆P = Change in price = New price - Original price = -1, Original price = P1 = ?, ∆Q = Change in quantity demanded = New quantity - Original quantity = 18 - 16 = 2 units, Original quantity = Q1 = 16 units
∴ ed = ∆Q∆P×P1Q1⇒ -1 = 2-1×P116⇒ P1 = 162 = Rs
 8NOTE: The given answer seems incorrect
 As shown above, the price before change is Rs
 8, not Rs  9

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