subject: Economics Assignment Help, Economics Homework Help and Economics Project Help [print this page] Economics Assignment Help, Economics Homework Help and Economics Project Help
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What is the definition ofElasticity of Demand alsoexplain withnumerical example.
The elasticity of price/demand may calculated by using the formula:
Ep =% change in quantity in demand
% change in price
Here is anumerical example explainingthe elasticity of demand :
The price of a product if $8 and the demandatthe price is 10 units. If the price reduces to $3 the demand isincreasedto the30 units. Calculate Price Elasticity:
Price Change= $8 -$3 = $5
Quantity Change = 10- 30 =- 20
Ep =% change in quantity in demand
% change in price
=- 20 x 8 =-3.2
5 x 10
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