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Price elasticity of demand is (-1), at a given price the consumer buys 60 units of the good. How many units will the consumer buy if the price falls by 10%:
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3 stepsIdentify the given values.
Price elasticity of demand (PED) is given as .
Initial quantity demanded () is 60 units.
The price falls by , so the percentage change in price () is .Use the price elasticity of demand formula to find the percentage change in quantity demanded.
The formula for price elasticity of demand is:
Substitute the given values into the formula:
Now, solve for the percentage change in quantity demanded ():
Calculate the new quantity demanded.
A increase in quantity demanded means the quantity will increase by of the initial quantity.
Increase in quantity = of 60 unitsThe new quantity demanded () is the initial quantity plus the increase:
The consumer will buy .
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