Share

# When the Price of Good Rises from Rs10 to Rs12 per Unit, Its Demand Falls from 25 Units to 20 Units. What Can You Say About Price Elasticity of Demand of the Good Through the 'Expenditure Approach'? - CBSE (Arts) Class 12 - Economics

#### Question

When the price of good rises from Rs10 to Rs12 per unit, its demand falls from 25 units to 20 units. What can you say about price elasticity of demand of the good through the 'expenditure approach'?

#### Solution

Given that

Q_1 = 25

Q_2 = 20

P_1 = Rs 10

P_2 = Rs  12

Hence

Total inital expenditure = Q_1 xx P_1 = 10 xx 25 = Rs 250

Total final expenditure = Q_2 xx P_2 = 20 xx 12 = Rs 240

As total expenditure is falling with a increase in the price of thye commodity, price elasticity of demand for the good is greater than 1

Is there an error in this question or solution?

#### APPEARS IN

Solution When the Price of Good Rises from Rs10 to Rs12 per Unit, Its Demand Falls from 25 Units to 20 Units. What Can You Say About Price Elasticity of Demand of the Good Through the 'Expenditure Approach'? Concept: Elasticity of Demand.
S