Find the Ed when the price changes from 10 to 5 and quantity demanded doubles ?
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Heya....
Ques :- When the price of the commodity falls from rs 10 to 5 , its quantity demand doubles , calculate its elasticity ??
Solution ____________
P = 10
P1 = 5
∆ P = P1 - P = 5-10 = -5
% change in price = ∆P/P X 100
= -5/10 X 100 = -50%
% change in Quantity demanded = 100
Now ____
Price elasticity is ___
- % change in Quantity demanded / % change in price
= - 100/-50 = 2 Answer
Thank you
Ques :- When the price of the commodity falls from rs 10 to 5 , its quantity demand doubles , calculate its elasticity ??
Solution ____________
P = 10
P1 = 5
∆ P = P1 - P = 5-10 = -5
% change in price = ∆P/P X 100
= -5/10 X 100 = -50%
% change in Quantity demanded = 100
Now ____
Price elasticity is ___
- % change in Quantity demanded / % change in price
= - 100/-50 = 2 Answer
Thank you
RohitSaketi:
you skipped those negative signs purposefully?.. the value of price elasticity varies from minus infinity to zero from the negative sign because deltaP/deltaQ has a negative sign ..since price and Demand are inversely proportional(except few exceptions)
Answered by
1
:
Ed of X = 2Ed of Y
% change in price of Y = 10
Q of Y= (-60)
Q of Y = 400 Q1 of Y = 340
P of X = 10 P1 of X = 8
and we need to find
% change in demand of X = ?
P of X = P1 of X - P of X
= 8 -10
= ( -2 )
% change in demand of Y
= Q of Y/Q of Y * 100
= (-60 )/400 * 100
= (-15)
Ed of Y = % change in demand of Y / % change in price of Y
= (-15)/10
= (-1.5)
now in the question we had the information that
Ed of X = 2Ed of Y
Ed of X = 2*(-1.5)
= (-3)
now % change in price of X
= P of X/ P of X * 100
= ( - 2)/10 * 100
= (-20)
Ed of X = % change in demand of X/ % change in price of X
(-3) = % change in demand of X / (-20)
NOW FINALLY
% change in demand of X = 60 %
☺
Ed of X = 2Ed of Y
% change in price of Y = 10
Q of Y= (-60)
Q of Y = 400 Q1 of Y = 340
P of X = 10 P1 of X = 8
and we need to find
% change in demand of X = ?
P of X = P1 of X - P of X
= 8 -10
= ( -2 )
% change in demand of Y
= Q of Y/Q of Y * 100
= (-60 )/400 * 100
= (-15)
Ed of Y = % change in demand of Y / % change in price of Y
= (-15)/10
= (-1.5)
now in the question we had the information that
Ed of X = 2Ed of Y
Ed of X = 2*(-1.5)
= (-3)
now % change in price of X
= P of X/ P of X * 100
= ( - 2)/10 * 100
= (-20)
Ed of X = % change in demand of X/ % change in price of X
(-3) = % change in demand of X / (-20)
NOW FINALLY
% change in demand of X = 60 %
☺
quantity doubles..let the intial quantity 'q' be 1 .. then 'q 1' will be 2 .. change in quantity = 1 - 2 (DeltaQ/DeltaP has a negative sign because price and Demand are inversely proportional to each other hence we shall ignore negative signs and take absolute data) .. % change in quantity demanded= 1/1 = 1 ; change in price = 5 -10 = 5 .....% change in price = 5/10 = 1/2 .. now elasticity of Demand = %change in Demand/% change in price = 1 / (1/2) = 2
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