Question

if the ratio of change in quantity demanded to original quantity is 0.5 and price elasticity of demanded change in price. and also find new expenditure if initial expenditure was Rs.500 at price Rs.20 per unit​

Answer 1

Explanation:

Given that

Price elasticity of demanded change in price

∆P/P= 0.5x 100= 50% change in price.

Ed= Percentage change in quantity demanded / percentage change in price

–2= X/50%

Percentage change in quantity demanded (X)= –2 x 20= –100%

Therefore percentage fall in demand= –100%

Let us consider original demand as X.

As we know that

Original quantity – fall in demand= New demand

X – (100% of X)= 25 units (500/20)

X – 100x/100= 25 units

X= 25 units of

Let us consider original price as Y.

Y – (100% of Y)= Rs

Y–20Y/100=6

Y=7.5

Therefore, original expenditure will be 50 x 7.5= Rs 375.