When price of orange is ₹4, consumer buys 50 units of it. The price

1.	When price of orange is ₹4, consumer buys 50 units of it. The price elasticity is -2. How many units will the consumer buy at ₹3 per unit of orange?
Answer» Σ d = -2 When P = 4, q = 50 When P = 3, q = ? \(\sum d = \frac{\Delta Q}{\Delta P} \times \frac{P}{q}\) -2 = \(\frac{\Delta q}{-1} \times \frac{4}{50} = \frac{4 \Delta q}{-50}\) 100 = 4 Δ q Δ q = 100/4 =25 ∴ New quantity = q + Δ q = 50 + 25 = 75

When price of orange is ₹4, consumer buys 50 units of it. The price elasticity is -2. How many units will the consumer buy at ₹3 per unit of orange?

Answer»

Σ d = -2

When P = 4, q = 50

When P = 3, q = ?

\(\sum d = \frac{\Delta Q}{\Delta P} \times \frac{P}{q}\)

-2 = \(\frac{\Delta q}{-1} \times \frac{4}{50} = \frac{4 \Delta q}{-50}\)

100 = 4 Δ q

Δ q = 100/4 =25

∴ New quantity = q + Δ q

= 50 + 25

= 75