Articles Management

Suppose the price elasticity of demand for text books is two and the price of the text book is increased by 10%. By how much does the quantity demand fall? Inter the result and discuss reasons for the fall in quantity demand?

Price Elasticity of Demand (Ep) = Percentage change in the Demand / Percentage change in Price Hence, here
2 = Percentage of change in demand /10
Percentage Change in Demand is 20 as per formula. So, Quantity Demands fall by 20 %. Here, Quantity Demand falls, because text books are the things which are not used for life long and there are many substitutes available for text books. If price increases, some may use old book instead of newer to save money. People might copy it to use, though it is illegal. Many text books alternative also available online. For Example, XYZ Company has made some text book production about social science. His text books in market now in demands. But if he increases cost, then consumer ask about low cost alternative for same book which was easily available as so many companies doing the social science text book related publication.