Advertisements
Advertisements
Question
The price of a good decreases from ₹100 to 80 per unit. If the price elasticity of demand for the good is 2 and the original quantity demanded is 30 units, calculate the new quantity demanded.
Advertisements
Solution
P1 = 100, P2 = 80
Change in price
(ΔP) = 100 - 80 = ₹20
Ed = 2
Q1 = 30 units.
Ed = `(ΔQ)/Q_1 xx P_1/(ΔP)`
2 = `(ΔQ)/30 xx 100/20`
12 = ΔQ
Q2 = Q1 + ΔQ
= 30 + 12
= 42 units.
The new quantity purchased at a reduced price will be 42 units.
APPEARS IN
RELATED QUESTIONS
A consumer buys 18 units of a good at a price of Rs 9 per unit. The price elasticity of demand for the good is (–) 1. How many units the consumer will buy at a price of Rs 10 per unit? Calculate.
As we move along a downward sloping straight line demand curve from left to right, price
an elasticity of demand : (choose the correct alternative)
(a) remains unchanged
(b) goes on falling
(c) goes on rising
(d) falls initially then rises
A consumer spends Rs 100 on a good priced at Rs 4 per unit. When its price falls by 25 percent, the consumer spends Rs 75 on the good. Calculate the price elasticity of demand by the Percentage method.
A consumer spends Rs 400 on a good priced at Rs 8 per unit. When its price rises by 25 percent, the consumer spends Rs 500 on the good. Calculate the price elasticity of demand by the Percentage method.
When the price of a good falls from Rs 10 to Rs 8 per unit, its demand rises from 20 units to 24 units. What can you say about price elasticity of demand of the good through the expenditure approach?
Price elasticity of demand of a good is (-) 1. Calculate the percentage change in price that will raise the demand from 20 units to 30 units.
Fill in the blanks with appropriate alternatives given in the bracket.
Demand elasticity can be measured from demand curve by ___________ method.
What do you mean by substitutes? Give examples of two goods which are complements of each other.
State whether the following statement is TRUE and FALSE.
Perfectly inelastic demand curve is parallel to the X axis.
Write short answer for the following question :
Total outlay method of measuring price elasticity of demand.
Draw a diagram to show the elasticity of demand when it is greater than one.
Arrange the following coefficients of price elasticity of demand in ascending order:
(−) 3.1, (−) 0.2, (−) 1.1
Give economic term:
Elasticity resulting from infinite change in quantity demanded.
If a good takes up a significant share of consumers' budget, its demand will be ______.
Assertion (A): The elastic demand curve for luxuries is flatter than normal.
Reason (R): The coefficient of Elasticity ranges between 0 and 1.
The elasticity of demand for school bag will be ______.
Price elasticity of demand is defined as the percentage change in the quantity demanded of a commodity divided by the percentage change in the price of that commodity.
When is the demand for a good said to be elastic?
Who introduced the concept of elasticity of demand?
