The demand schedule for pens is given below
|Price of Pen (Rs. per pen)||Quantity Demanded|
Calculate the price elasticity of demand and determine the type of price elasticity.
Q = 50
Therefore, a change in the price of pens 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, a change in quantity demanded of pens is:
The price elasticity of demand for bread is 5, which is greater than one. Therefore, in such a case, the demand for pens is relatively elastic.