Demand for a product at Rs. 10 per unit is 400. If the price elasticity of demand is 1, how much the

Demand for a product at Rs. 10 per unit is 400. If the price elasticity of demand is 1, how much the demand will be at Rs. 16 per unit? a. 240 b. 200 c. 160 d. 120 Ans - c Solution : Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price % Change in Quantity Demanded = 400-x/400*100 = (400-x)/4 % Change in Price = 6/10*100 = 60 Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price 1 = ((400-x)/4)/60 60 = (400-x)/4 240 = 400-x x = 400-240 x = 160