Elastic price Demand

a) Determine the price elasticity of demand if the quantity demanded for product M is
1000 units at a price of Rs. 100/-, The price declines to Rs. 90/ - and the quantity
demanded increases to 1500 units.

(Q2−Q1 )/ Q1
Edp =
(P 2−P1)/ P1
Edp = (1,500−1,000)/¿ ¿ = -5 elastic

b) Determine the price of elasticity of demand given that, the quantity demanded for
product M is 1000 units at a price of Rs. 100/- and the price decline to Rs. 70/- and the
quantity demanded increases to 1100 units.

(Q2−Q1 )/ Q1
Edp =
(P 2−P1)/ P1
Edp = (1,100−1, 000)/¿ ¿ = 0.33 inelastic

c) Determine the price elasticity of demand given that the quantity demanded for
product M is 1000 units at a price Rs. 100/- and the price declines to Rs. 50/- and the
quantity demanded increases to 1500 units.

(Q2−Q1 )/Q1
Edp =
(P 2−P1)/ P1
Edp = (1,500−1,000)/¿ ¿ = 1.00 Unity Elasticity