Question : If the price of a product increases from INR 50 to INR 60 per unit, and the quantity demanded decreases from 80 units to 70 units, calculate the percentage change in quantity demanded.
Option 1: -10%
Option 2: -12.5%
Option 3: -14%
Option 4: -20%
Correct Answer: -12.5%
Solution : The correct answer is (b) -12.5%
To calculate the percentage change in quantity demanded, we use the formula:
Percentage Change in Quantity Demanded = [(New Quantity Demanded - Initial Quantity Demanded) / Initial Quantity Demanded] * 100
Initial Quantity Demanded = 80 units
New Quantity Demanded = 70 units
Using the formula, we can calculate the percentage change in quantity demanded:
Percentage Change in Quantity Demanded = [(70 - 80) / 80] * 100
= (-10 / 80) * 100
= -12.5%
The percentage change in quantity demanded is -12.5%.
Based on the provided options, the closest option to the calculated percentage change is: -12.5%
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