1.

Calculate the elasticity of demand by using total expenditure method from the data given below : Price of  1 TV Market DemandTotal expenditure9,200   1007,360  1254,600  200

Answer»
 Price of  1 TV Market DemandTotal expenditure
9,200   100 9,20,000
7,360  125 9,20,000
4,600  200  9,20,000

Change in price leading to changes in quantity demanded causes changes in total expenditure incurred on commodity. By looking at the variation in total expenditure, price elasticity can be calculated. Since total expenditure remaining the same when price changes, elasticity is equal to one (unitary elastic demand).



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