When price of a commodity falls by 20%, the quantity demanded of it increases by 80%. Find out its price elasticity of demand.

Explanation

`{:("% Change in Demand = 80% % Change in Price "=-20%),(" Elasticity of Demand (ED) = ?"):}`
Price Elasticity of Demand (ED)
`=("% Change in quantity demanded")/("% Change in Price")`
`=(80%)/(-20%)=-4`
`ED=(-)4` (Demand is highly elastic as `ED gt1`).