Question

A consumer buys $18$ units of a good at a price of $Rs.9$ per unit. The price elasticity of demand for the good is $(-)1$. How many units the consumer will buy at a price of $Rs.10$ per unit? Calculate.

Answer 1

Given, $P=Rs.9;P_1=Rs.10;△P=P_1-P=Rs.10-Rs.9=Rs.1$
$Q=18units;Q_1=?$
$E_d=(-)1$
Price elasticity of demand $\left(E_d\right)=\frac{P}{Q}\times \frac{△Q}{△P}$
$-1=\frac{9}{18}\times \frac{△Q}{1}$
$△Q=-2$
Now, $△Q=Q_1-Q$
$-2=Q_1-18$
$Q_1=18-2=16$
Consumer will buy $16$ units at a price of $Rs.10$ per unit.