Given own price elasticity equal to -2.5 implies that if the price of the good increase by Rs.10 then the quantity demanded of the good?
- Will decrease by 2.5 units
- Will Increase by 2.5 units
- Will decrease by 25%
- None of these
Explanation
Own price elasticity shows percentage change in quantity demanded due to price change.
Formula: Elasticity = % change in quantity ÷ % change in price
Negative sign shows inverse relationship (law of demand).
Elasticity = -2.5 means demand is elastic (very responsive).
E_d = %ΔQ / %ΔP = -2.5
If %ΔP = +10%
Then %ΔQ = -2.5 × 10% = -25%.
Last verified on 24-04-2026
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