At Rs 5 unit a consumer buys 40 unit of the commodity if there price elasticity demand is -2 how much will he buy if it price reduces to Rs 4 unit
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Answer:
price elasticity of demand = -0.5
total expenditure = 2000
original price = 20
original demand = 2000/20
= 100
% change in price = -10%
new demand = x
-0.5 = y / -10
y = -0.5 * -10
y = 5
y = change in demand / original demand * 100
5 = z / 100 *100
5 = 100z /100
5 = z
x = z + original demand
x = 5 + 200
x = 205
the new demand is 205
Explanation:
Okay
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