Question

The price elasticity of demand for a commodity is \(-1.5\). If its price increases by \(10%\), then the approximate percentage change in quantity demanded will be:

• A. Decrease by \(5%\)
• B. Decrease by \(10%\)
• C. Decrease by \(15%\)
• D. Increase by \(15%\)

Hint:

For quick CUET calculations: \[ %\Delta Q = E_d \times %\Delta P \] Always interpret the sign carefully. A negative sign indicates a fall in quantity demanded when price rises.

Answer 1

The Correct Option is C

Concept: Price Elasticity of Demand measures the responsiveness of quantity demanded to a change in price. The formula is: \[ E_d= \frac{%\Delta Q}{%\Delta P} \] For most goods, elasticity is negative because price and quantity demanded move in opposite directions.

Step 1: Write the given information. \[ E_d=-1.5 \] \[ %\Delta P=+10% \]

Step 2: Apply elasticity formula. \[ -1.5= \frac{%\Delta Q}{10} \] Multiplying both sides by \(10\): \[ %\Delta Q=-15% \]

Step 3: Interpret the sign. The negative sign indicates an inverse relationship. Hence quantity demanded falls by \(15%\). Therefore, \[ \boxed{\text{Decrease by }15%} \] Option (C) is correct.