Question

if a consumer buys 10 units of a good at rupees 50 per unit at what price he will buy 25 units .so that his expenditure remain the same .what will be elasticity of demand in that case

Answer 1

Answer:

1250

Explanation:

very easy question m

Answer 2

Given:

A consumer buys 10 units of a good at a price of Rs. 50 per unit

To find:

(i) Per unit price of 25 units of the goods, so that the expenditure remain the same

(ii) Elasticity of demand

Solution:

(i) Finding the price per unit of 25 units of goods:

We have 10 units of goods is bought for Rs. 50 per unit

∴ Total expenditure in buying 10 units of goods = 10 × Rs. 50 = Rs. 500

The expenditure should remain same while buying 25 units of goods

∴ The price per unit should be = $\frac{500}{25}$ = Rs. 20

Thus, the consumer should buy 25 units of goods at Rs. 20 per unit.

(ii) Finding the elasticity of demand:

We have,

Original Quantity of goods, Q = 10 units

Original Price of goods, P = Rs. 50 per unit

New Quantity of goods, Q1 = 25 units

New Price of goods, P1 = Rs. 20 per unit

The formula for the elasticity of demand is given as,

$E_d$ = [∆Q/∆P] × [P/Q]

⇒ $E_d$ = [(Q1 - Q) / (P1 - P)] × [P/Q]

⇒ $E_d$ = [(25 - 10) / (20 - 50] × [50/10]

⇒ $E_d$ = [15 / -30] × [5]

⇒ $E_d$ = -½ × 5

⇒ $E_d$ = $\frac{-5}{2}$

⇒ $E_d$ = - 2.5

Thus, the ealsticity of demand in this case will be (-) 2.5.

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Also View:

A consumer buys 40 units of a good at a price of 5 per unit.Suppose the price elasticity of demand is (-)2.At what price will he buy 32 units?

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