Calculate price elasticity of demand :

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Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Calculate price elasticity of demand :

Options:

(-) 0.75

(-) 1.0

(-) 0.5

(-) 0.25

Correct Answer:

(-) 0.5

Explanation:

The correct answer is option (3) : (-) 0.5

$P_1=5,P_2=7$

$Q_1=15,Q_2=12$

$e_D=(\frac{ΔQ}{ΔP})×(\frac{P_1}{Q_1})$

$=\frac{(Q_2-Q_1)}{(P_2-P_1)}×(\frac{5}{15})$

$=\frac{(12-15)}{(7-5)}×(\frac{1}{3})$

$=\frac{-3}{+2}×(\frac{1}{3})=-\frac{1}{2}$

$e_D=-0.5$