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InterviewSolution
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A consumer buys 20 units of a good at Rs. 10 per unit. The price elasticity of demand of this good is (-)1. Calculate quantity demanded by the consumer when price falls to Rs. 8 per unit. |
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Answer» <P> Solution :`{:("PED" =[-]1),("Initial Price (P) = 10Initial Quantity "(Q)=20),("New Price "(P_(1))=8 "New Quantity " (Q_(1))=?),(Delta P=[-]2 "" Delta Q=?):}``PED=(Delta Q)/(Delta P)xx(P)/(Q) "or" (-)1=(Delta Q)/((-)2)xx(10)/(20)` `Delta Q=4` As, Price is falling, than DEMAND must rise by `Delta Q`. So, New Quantity = Initial Quantity `+Delta Q=20+4+24` |
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