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| 1. |
The demand for a good at Rs. 10 per unit is 40 units. Price falls by Rs. 5. If price elasticity of demand is (-)3, calculate the new quantity demanded. |
| Answer» <html><body><p></p>Solution :`{:("Original <a href="https://interviewquestions.tuteehub.com/tag/quantity-1174212" style="font-weight:bold;" target="_blank" title="Click to know more about QUANTITY">QUANTITY</a> (Q) = 40 unitsOriginal <a href="https://interviewquestions.tuteehub.com/tag/price-1165141" style="font-weight:bold;" target="_blank" title="Click to know more about PRICE">PRICE</a> (P) = Rs. 10"),("New Quantity "(Q_(1))=? " unitsFall in Price "(Delta P)=-Rs. <a href="https://interviewquestions.tuteehub.com/tag/5-319454" style="font-weight:bold;" target="_blank" title="Click to know more about 5">5</a>),("Change in Quantity "(Delta Q)=? "New Price "(P_(1))=Rs. 5),("Elasticity of Demand (ED) = "-3):}`<br/>Price Elasticity of demand (ED) `=(Delta Q)/(Delta P)<a href="https://interviewquestions.tuteehub.com/tag/xx-747671" style="font-weight:bold;" target="_blank" title="Click to know more about XX">XX</a>(P)/(Q)`<br/>`(-)3=(Delta Q)/((-)5)xx(10)/(40)i.e.,Delta Q= 60`units<br/> As price is decreasing, the quantity demanded will increase. It meas that<br/>New Quantity= Original Quantity (Q) + Change in Quantity `(Delta Q)`<br/> `=40+60=100` units<br/> New Quantity = 100 units.</body></html> | |