Comment upon the degree of elasticity of demand for Good X, in the following given situation,if the price of the commodity rises from ₹ 5 per unit to ₹ 7 per unit and the quanty demanded falls from 20 units to 16 units, using proportionate method.
Answers
Answered by
0
Answer:
The elasticity of demand comes after dividing the percentage change in quantity with the percentage change in price. Thus, the elasticity of demand is 2.
Explanation:
The percentage change in price = (change in price / original price ) X 100
= (1 / 4) X 100
= 25%
the percentage change in quantity = (change in quantity / original quantity ) X 100
= (10 / 20 ) X 100
= 50%
The elasticity of demand = % change in quantity / % change in price
= 50 / 25
= 2
The elasticity of demand is 2.
The elasticity of demand comes after dividing the percentage change in quantity with the percentage change in price. Thus, the elasticity of demand is 2.
Similar questions