The demand schedule for milk is given below 15 – 90 and 20 – 85

The demand schedule for milk is given below

Price of Milk (Rs. per pen)Quantity Demanded (liter
1590
2085

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

Solution:

P= 15
Q = 90
P1= 20
Q1 =85

Therefore, a change in the price of milk is:

Solution of ecoo

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 milk is:

economics homework help

The price elasticity of demand for milk is 0.2, which is less than one. Therefore, in such a case, the demand for milk is relatively inelastic.