The demand schedule for cloth is given as follows:
|Price of Clothh (Rs. per pen)||Quantity Demanded (Mtr)|
Calculate the price elasticity of demand and determine the type of price elasticity.
Q = 100
P1 = 15
Q1 = 150
Therefore, change in the price of cloth is:
In the above calculation, a change in price shows a negative sign, which is ignored. This is because price and demand are inversely related which can yield a negative value of price (or demand).
Similarly, change in quantity demanded of cloth is:
The price elasticity of demand for cloth is 1. Therefore, in such a case, the demand for milk is unitary elastic.