Question

70% fall in price of a commodity leads to 50 rise in quantity demand identify and explain​

Answer 1

Answer:

Price Elasticity of a supply Es = (Percentage change in the quantity of supply) Qs/ (Percentage change in the price of the commodity) Ps.

Qs = 25 % since there is a change in the quanity of supply by 25 %

Ps = 50% since there is a change in the price of the quantity by 50 %

Thus, Es = 25/50 = 0.5.

Since, Es is less than 1 but not equal to 0 it is inelastic which is also the degree of price elasticity.

Answer 2

The above-mentioned phenomenon can be described by,

Law of Demand.

• When the demand for commodity changes due to a change in the price of that commodity it is known as the Law of Demand.

Price Elasticity of Demand

• The percentage of change in the demand for a commodity concerning the change in the price of that commodity is known as the price elasticity of demand for that commodity.