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What is Elasticity of Demand with numerical example?
The elasticity of demand can be calculated by using the formula:
Ep = % change in quantity in demand
% change in price
Numerical example explaining the elasticity of demand :
The price of a product if $10 and the demand at the price is 20 units. If the price reduces to $4 the demand is increased to the 40 units. Calculate Price Elasticity for the same.
Price Change = $10 -$4 = $6
Quantity Change = 20- 40 =- 20
Ep =% change in quantity in demand
% change in price
= - 20 x 10 = -4
6 x 10
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