Question

13. When price of the commodity reduces from 5 per unit to 4 per unit, expenditure on the
commodity reduces from 60 to 48. Find price elasticity of demand by percentage method.
(Ans. E= 0 (zero)​

Answer 1

Answer:

by both methods.........

Answer 2

The Price Elasticity of Demand for above  given Price and Quantity is 1.

Given:-

Initial price of the commodity, P₀ = Rs 5

Final price of the commodity, P = Rs 4

Initial Quantity demanded, Q₀= Rs 60

Final Quantity demanded, Q = Rs 48

To Find, Price elasticity of demand(E) through percentage method

Solution:- Price elasticity of demand(E) = $\frac{Percentage change in Quantity demanded}{Percentage change in Price}$

Change in Quantity demanded, ΔQ = Q - Q₀

 = 48 - 60

 = -12

Change in Price, ΔP = P - P₀

 = -1

Putting the values in above formula, we get,

E = $\frac{-20}{-20}$

E = 1

Hence, the price elasticity of demand is 1 for the given demand.

What is Price Elasticity of Demand ?

It is the degree of responsiveness of quantity demanded to the change in its price.

If it is infinity, then the Price elasticity of demand is perfectly elastic.

If it is 1, then Price Elasticity of demand is also unitary.

It it is 0, then Price elasticity of demand is perfectly inelastic.

#SPJ5