Question

When price of orange is ₹4, consumer buys 50 units of it. The price elasticity is -2. How many units will the consumer buy at ₹3 per unit of orange?

Answer 1

Σ d = -2 

When P = 4, q = 50 

When P = 3, q = ?

\(\sum d = \frac{\Delta Q}{\Delta P} \times \frac{P}{q}\)

-2 = \(\frac{\Delta q}{-1} \times \frac{4}{50} = \frac{4 \Delta q}{-50}\)

100 = 4 Δ q 

Δ q = 100/4 =25 

∴ New quantity = q + Δ q 

= 50 + 25 

= 75