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When the price of good X is ₹ 5, the con...

When the price of good X is ₹ 5, the consumer buys 100 units of good X. At what price would he willing to purchase 140 units of good X ? The price elasticity of demand for good X is 2.

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The correct Answer is:
New price = ₹ 4
Price Elasticity of demand `(E_(d))=(DeltaQ)/(DeltaP)xx P/Q 2 = (40)/(DeltaP) xx 5/100 Rightarrow DeltaP= ₹ 1`
As the quantity demanded is decreasing , price will increase. It means,
new price = Original pirce (P) + Change in price `(DeltaP)=₹5-₹1=₹4 `
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