Question

When price of a commodity X falls by 10 per cent, its demand rises from 150 units to 180 units. Calculate its price elasticity of demand. How much should be the percentage fall in its price so that its demand rises from 150 to 210 units ?

Answer 1

We are given,

Percentage fall in price = 10

Initial demand = 150

New demand = 180

So, we can say that the price should fall by 20% if the demand is to rise from 150 to 210.