The market demand for a good at ₹ 4 per unit is 100 units. Due to increase in price, the market demand falls to 75 units. Find out the new price, elasticity of demand is (-)1.

Answer

New price = ₹5

Explanation

Price Elasticity of demand `(E_(d))=(DeltaQ)/(DeltaP)xx P/Q -1 = (-25)/(DeltaP) xx 4/100 Rightarrow DeltaP= ₹ 1`
As the quantity demanded is decreasing , price will increase. It means,
new price = Original pirce (P) + Change in price `(DeltaP)= 4+1 = ₹ 5`