when price of a good falls from ₹ 5 to ₹ 3 per unit, its demand rises by 40 % . Calculate its price elasticity of demand.

Answer

`E_(d)` = (-) 1 (Demand is unitary elastic)
Negative sign of `E_(d)` indicates the inverse relationship between price and quantity demanded.

Explanation

Percentage change in price = `(DeltaP)/P xx 100 =-2/5 x100 = -40% `
Price Elasticity of Demand `(E_(d)) = (" Percentage change in Quantity demanded")/("percantage change in price") =(40%)/(-40%)`
Price Elasticity of Demand `(E_(d)) = (-)1`