Question

10. A commodity shows Ed = (-) 2. Quantity demanded reduces from 300 units to 150 units in response
to increase in price. Find the increased price when initially it was 20 per unit.
[Ans. Increased price = * 25]​

Answer 1

solution:-

Here, Ed =(-), P = Rs 20Q = 300 units, Q1 =150 units∆Q = Q1 – Q = 150 -300 = -150 unitsEd = P/Q x ∆Q/∆P-2 = 20/300 x -150/∆P-2 = -10/∆P∆P = -10/-2 =5P1 = P+∆P= 20+5 =25Ans:- New price = Rs 25.

Answer 2

Answer:

The increased price is 25.

Explanation:

In this question, we have to calculate the price change. In this question, it is given that the price elasticity of demand is (-)2. In this, it is also given that the demand for the commodity is decreased from 300 to 150 units when the price of the commodity is increased. The initial price is 20 per unit.

To calculate the change in the price we use the formula of the elasticity of demand.

$Eod=\frac{Q}{P}*\frac{Po}{Qo}$

Here, Q means the quantity

P means the price

Po means a change in price,

No means a change in quantity

Now we put the value in the formula:

$2=\frac{150*20}{Change in Price* 300} \\ =5$

Hence, the change in price is 5

Now we calculate the price after the increase:

$Increased Price= Original Price+ Change in price$

$Increased Price= 20+5\\=25$

Hence, the increased price is 25 per unit.

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