Question

46.
If a demand of good changes by 60% due
to 40% change in price, the elasticity of
demand is
(A) 0.5
(B) - 1.5
(C)
1
(D)
0​

Answer 1

Answer:

46.

If a demand of good changes by 60% due

to 40% change in price, the elasticity of

demand is

(A) 0.5

(B) - 1.5

(C)

1

(D)

0

Explanation:

don't know actually

Answer 2

Answer: (B) - 1.5

If the demand for goods changes by 60% due to a 40% change in price, the elasticity of demand is - 1.5

Explanation:

Here, the good in question has highly elastic demand as when there was a change in prices there was a major change in the demand for the good which is represented by the negative value.

As the value is negative this shows us that it is inferior good.

Formula:

$\frac{\frac{(Q_{1}-Q_{0})}{(Q_{1}+Q_{0})} }{\frac{(P_{1}-P_{0})}{(P_{1}+P_{0})} }$

Let us assume the Quantity demanded to be 100 and the price is 100

Changes: Demand decreases by 60% and prices increases by 40%

Thus,

$Q_{1} =100$

$Q_{0} = 60$

$P_{0} = 140$

$P_{1} = 100$

Putting the values in the formula as,

$=\frac{\frac{(100-60)}{(100+60)} }{\frac{(100-140)}{(100+140)} }$

$=\frac{\frac{40}{160} }{\frac{-40}{240} }$

$=-\frac{40*40}{160*240}$

$=-1.5$

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