The demand schedule for bread is given below

Price of Bread (Rs per packet)Quantity Demanded (per month)
23100
23.0470

Calculate the price elasticity of demand and determine the type of price elasticity.

Solution:
P= 23
Q = 100
P1= 23.04
Q1 =70
Therefore, change in the price of milk is:
DP = P1 – P
DP = 23.04 – 23
DP = 0.04
A change of Rs. 0.04 is a negligible change; thus, can be considered as zero.

Similarly, change in quantity demanded of bread is:

Solution
In the above calculation, a change in demand shows a negative sign, which is ignored. This is because price and demand are inversely related which can yield a negative value of demand (or price). Price elasticity of demand for bread is:
Homework solution

The price elasticity of demand for bread is ∞. Therefore, in such a case, the demand for bread is perfectly elastic.