Question

A consumer spend 1500 unit at a price of rupee10 per unit when price rises 20% a consumer spend continue 1500 unit on a good calculate ep by percentage method​

Answer 1

Answer:

Answer

Initial price (P) =Rs.10

Rise in price by 20 per cent = 10×

100

20

=Rs. 2

New price (P

1

) Rs.10+Rs.2=Rs.12

Given, P=Rs.10; P

1

=Rs.12;

△P=P

1

−P=Rs.12−Rs.10=Rs.2

Q=

10

1,500

=150units;Q

1

=

12

1,500

=125units;

△Q=Q

1

−Q=(125−150)units=(−)25units

Price elasticity of demand (E

d

)=(−)

Q

P

×

△P

△Q

=(−)

150

10

×

2

−25

=

6

5

=0.83

Price elasticity of demand =0.83

Answer 2

Initial price (P) =Rs.10

Rise in price by 20 per cent = 10× 20/100

=Rs. 2

New price (P 1 ) Rs.10+Rs.2=Rs.12

Given, P=Rs.10; P 1 =Rs.12;

P=P 1−P=Rs.12−Rs.10=Rs.2

Q=Q1=Q=(125-150) units =(-)25 unit s

price elasticity of demand (Ed)

(-)p/q x △q/△p

=(-)10/150 x -25/2 =0.83

price elasticity of demand=0.83