Question

(Ans. (1) Ed=2; (11) Ed>1]
4. When the price is 5 per unit, a consumer buys 40 units of a commodity and his price
elasticity of demand is (-) 1.5. How much will he buy if the price is reduced to 4
per

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Answer 1

Explanation:

Price elasticity =proportionate change in Qty/Proportionate change in price

-1.5 = (∆q/Q)/(∆p/p)

-1.5 •(∆p/p) =∆q/q

-1.5.• -.1/.5) =+ (3/2) •1/5 =3/10

∆q/Q=3/10 =O.3

∆q = 0.3×Q = .3×40=12

Quantity bought=40+12 = 52

OR

when the price is is rs 5 per unit a consumer buys 40 unit of a commodity and his price elasticity of demand is - 1.5 how much will he buy if the prices reduced to rs 4 per unit. Hence, the new quantity demanded is 52 units

THE ANSWER IS 52 UNITS