When price of a commodity falls by 80 % , the quantity demanded of it increases by 100 %. Find out its price elasticity of demand.

Answer

`E_(d) = (-)1.25` ( Demand is highly elastic as `E_(d) gt 1)`
Negative sign of `E_(d)` indicates the incerse relationship between price and quantity demanded.

Explanation

Price Elasticity of Demand `(E_(d)) = (" Percentage change in Quantity demanded")/("percantage change in price") =(100%)/(-80%)`
price Elasticity of demand `(E_(d)) = (-) 1.25`