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# A Consumer Buys 27 Units of a Good at a Price of Rs 10 per Unit. When the Price Falls to Rs 9 per Unit, the Demand Rises to 30 Units. What Can You Say About Price Elasticity of Demand of the Good Through the 'Expenditure Approach'? - CBSE (Arts) Class 12 - Economics

#### Question

A consumer buys 27 units of a good at a price of Rs 10 per unit. When the price falls to Rs 9 per unit, the demand rises to 30 units. What can you say about price elasticity of demand of the good through the 'expenditure approach'?

#### Solution

Given that

Q_1 = 27

Q_2= 30

P_1 = Rs 10

P_2 = Rs 9

Therfore

Total initial expenditure = Q_1 xx P_1 = 270

Total final expenditure = Q_2 xx P_2 = 270

As there is fall in the price of good, the total expenditure remains constant, so it implies that demand for the good is unitary elastic i.e. |ed| = 1.

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#### APPEARS IN

Solution A Consumer Buys 27 Units of a Good at a Price of Rs 10 per Unit. When the Price Falls to Rs 9 per Unit, the Demand Rises to 30 Units. What Can You Say About Price Elasticity of Demand of the Good Through the 'Expenditure Approach'? Concept: Elasticity of Demand.
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