Consider the demand for onion. At Rs.10 per kg, demand for onion is 15 kgs. Suppose the price increases to Rs.20 per kg, the demand decreases to 10 kgs. Calculate the price elasticity of demand.
∆q = 10 – 15 = -5;
∆p = 20 – 10
= 10; then PED is
= -0.33 (the Price Elasticity is 0.33)
