Question

As a result of 2 percent fall in price of food,its demand rises by 8 percent find the out price elasticity of demand?

Answer 1

Answer:

Given, percentage change in price =(−)10%

Q=150 units;Q

1

=180 units;△Q=Q

1

−Q=(180−150)units=30 units

Percentage change in quantity demanded =

Q

△Q

×100

=

150

30

×100=20%

Price elasticity of demand (E

d

)=(−)

Percentage change in price

Percentage change in quantity demanded

=(−)

−10%

20%

=2

When demand rises from 150 to 210 units:

E

d

=2

Q=150 units;Q

1

=210 units;△Q=Q

1

−Q=(210−150)units=60 units

Percentage change in quantity demanded =

Q

△Q

×100

=

150

60

×100=40%

Price elasticity of demand (E

d

)=(−)

Percentage change in price

Percentage change in quantity demanded

2=(−)

Percentage change in price

40%

Percentage change in price =

2

−40%

=20%

Price elasticity of demand =2.

Percentage fall in price =20%.

Answer 2

Answer:

The price elasticity of demand = 0.25

Explanation:

• Price elasticity of demand: Price elasticity of demand means the reaction of customer with the change in price of product.

        For example if the price of any product increases then the demand can be increased or decrease depending on the quality of product.

• Formula for finding the price elasticity of demand:

         Price elasticity of demand = $\frac{Percentage change in quantity demanded}{ Percentage change in price}$

• Given data in question: Percentage change in price = 8%

                       Percentage change in quantity demanded = 2%

      From the above formula, Price elasticity of demand = $\frac{2}{8}$ = 0.25

      ∴ The price elasticity of demand = 0.25

To know more about price elasticity of demand, click the link given below:

https://brainly.in/question/2820118

https://brainly.in/question/11375650