Question 35

If price of an article decreases from Rs 800 to Rs 700, quantity demanded increases from Q1 units to 70 units. If point elasticity of demand is -1.333 find Q1?

Solution

Point price elasticity of demand = (Change in quantity / Change in price)

-1.33 = $$\frac{(70 - Q1) / Q1}{(-100 / 800)}$$

560 - 8Q1= 1.33Q1

560 = 9.33Q1

Q1 = 60.02

Hence, option C is the correct answer.

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