When the price of a commodity falls by 80%?

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Text Solution

Answer : `E_(d) = (-)1.25` ( Demand is highly elastic as `E_(d) gt 1)` <br> Negative sign of `E_(d)` indicates the incerse relationship between price and quantity demanded.

Solution : Price Elasticity of Demand `(E_(d)) = (" Percentage change in Quantity demanded")/("percantage change in price") =(100%)/(-80%)` <br> price Elasticity of demand `(E_(d)) = (-) 1.25` <br> <img src="https://d10lpgp6xz60nq.cloudfront.net/physics_images/SG_MIC_ECO_C04_S01_011_S01.png" width="80%">