InterviewSolution
Saved Bookmarks
InterviewSolution
| 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» Solution :`{:("Original QUANTITY (Q) = 40 unitsOriginal PRICE (P) = Rs. 10"),("New Quantity "(Q_(1))=? " unitsFall in Price "(Delta P)=-Rs. 5),("Change in Quantity "(Delta Q)=? "New Price "(P_(1))=Rs. 5),("Elasticity of Demand (ED) = "-3):}` Price Elasticity of demand (ED) `=(Delta Q)/(Delta P)XX(P)/(Q)` `(-)3=(Delta Q)/((-)5)xx(10)/(40)i.e.,Delta Q= 60`units As price is decreasing, the quantity demanded will increase. It meas that New Quantity= Original Quantity (Q) + Change in Quantity `(Delta Q)` `=40+60=100` units New Quantity = 100 units. |
|