Respuesta :
Answer:
[tex]Price Elasticity of Demand= \frac{Percentage change in Demand}{Percentage change in Price}[/tex]
At Price = [tex]P_{0}[/tex]
Quantity demanded = [tex]Q_{0}[/tex]
At Price = [tex]P_{1}[/tex]
Quantity Demanded = [tex]Q_{1}[/tex]
Now,
[tex]Percentage change in Demand = \frac{(Q_{1} - Q_{0})}{Q_{0}}[/tex]
[tex]Percentage change in Price = \frac{(P_{1} - P_{0})}{P_{0}}[/tex]
[tex]Price Elasticity of Demand = \frac{\frac{(Q_{1} - Q_{0})}{Q_{0}}}{\frac{(P_{1} - P_{0})}{P_{0}}}[/tex]
Above formula if used will give the correct answer related to Price Elasticity of Demand.
Another variant of above formula is also being used on prominent basis.
[tex]Price Elasticity of Demand = \frac{\frac{(Q_{1} - Q_{0})}{(Q_{1} + Q_{0})} }{\frac{(P_{1} - P_{0})}{P_{1} + P_{0}} }[/tex]
Utilization of any of the above Formula will give the ideal outcome in estimating Price elasticity of demand.
