If `(DeltaQ)/Q=-0.6` and price elasticity is (-) 0.75, calculate the percetage change in price.Also Calculate the new expenditure if initital expenditure was ₹500 at the price of ₹20.

Explanation

Given :`(DeltaQ)/Q= 0.6` ( Negative value indicates that quantity has decreased. It means, now price is more than the original price, i.e price has increased.)
Percentage Change in Demand = `(DeltaQ)/Qxx 100 = -0.6 xx 100 =-60%`
Price Elasticity of Demand `(E_(d)) =(" Percentage Change in Quantity Demanded") /("Percentage Change in price")`
` (-) 0.75= (-60%)/("percentage Change in price")`
Percentage Change (rise) in price = 80 %
Initial Expenditure= Original Quantity (Q) `xx` Original price (P)= 500
` Q xx 20 = 500`
i.e Q = 25
New Quantity `(Q_(1))` = Original Quantity + Change in Quantity
` 25 + (25 xx -60%) = 25-15=10 unit`
New price `(P_(1))`= Original price + Change in price
`20 + (20xx80 %)=20+16 = ₹36`
New Expenditure = New Quantity `(Q_(1))xx "New price" (P_(1)`
`10xx 36 = ₹360`