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A Consumer buys 20 units of a good at Rs 10 Per unit. The price elasticityof demand is (-1. Calculate theQuantity demanded by the consumerswhen price falls by Rs 2 per unit |
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Answer» AnswerSuppose the consumer initially buys 100 units of the good.New quantity =100+40 PER cent of 100=140P=Rs.10;P 1 =Rs.9;△P=P 1 −P=Rs.8−Rs.10=(−)Rs.2Q=100 units;Q 1 =140 units;△Q=Q 1 −Q=(140−100)units=40 unitsPrice elasticity of demand (E d )=(−) QP × △P△Q =(−) 10010 × −240 =2Percentage change in price = P△P ×100= 108−10 ×100= 10−2 ×100=(−)20%Price elasticity of demand (E d )=(−) Percentage change in pricePercentage change in quantity DEMANDED =(−) (−)20%40% =2Price elasticity of demand =2. |
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