The price elasticity of demand of good X is half the price elasticity of demand of good Y. A 25% rise in the price of good Y reduces its demand from 400 units to 300 units.Calculate percentage rise in demand of good X when its price falls from ₹ 10 to ₹ 8 per unit.

The price elasticity of demand of good X is half the price elasticity

1.	The price elasticity of demand of good X is half the price elasticity of demand of good Y. A 25% rise in the price of good Y reduces its demand from 400 units to 300 units.Calculate percentage rise in demand of good X when its price falls from ₹ 10 to ₹ 8 per unit.
Answer» Solution :In the GIVEN example, we will first calculate PRICE Elasticity of Goods Y Percentage Change in Demand = `(DeltaQ)/Qxx 100 = (-100)/ 400 xx 100 =-25% ` PRICEELASTICITY of Demand`(E_(d)) = ("Percentage Change in Quantity Demanded")/("Percentage Change in price ")=(-25%)/(25%)` Price Elasticity of Demand `(E_(d))= (-)1` Now,price Elasticity of Good X= (-) 0.5 (as elasticity of demand of good X is half the price elasticirty of demand of Good Y) . Lot us now calculate % rise in Demand for X percentage change in price = `(DeltaP)/P xx100 = (-2)/10 xx100= -20% ` `(-)0.5= ("Percentage Change in Quantity Demanded")/(-20)` Percentage change in Price `=(DeltaP)/(P)xx100=(-2)/(10)xx100=-20%` `(-)0.5 = ("Percentage Change in Quantity Demanded")/(-20)` Percentage rise in demand for X = 10% Demand for Good X will rise by = 10%