A consumer buys 10 units of a good at the price of 6 rupees per unit. Price elasticity of elasticity of demand is (-)1. At what price will he buy 10 units? Use expenditure approach of price elasticity of demand to answer this question.
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Given, {{E}_{d}} = (-) 1
In this case, when Elasticity of Demand is (-)1, total expenditure will remain constant.
Total expenditure = 10 x 6 = Rs 60 Total expenditure does not change.
When quantity is 12 units,
Price = TE/Q = 60/12 = rs 5 per unit
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answer is at rs 5 per unit he will buy 12 units
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