2 answer

A consumer buys 50 units of a good at a price of Rs 10 per unit. When price falls by Rs 5 per unit, he buys 100 units. Find out Price Elasticity of Demand by total expenditure method.


As per the expenditure approach, even with a change in price, the total expenditure remains unchanged, demand is unitary elastic, i.e. {{E}_{d}} =1.