Question

in a market price of good x rises from rupees 5 per unit to rupees 6 per unit its quantity demanded a fall from 200 units to 100 units find the elasticity value also comment the nature of the elasticity​

Answer 1

Answer:

We are given,

Percentage fall in demand =20

Initial Price =10

New Price =12

% Increase in Price =  

10

2

​  

×100=20%

We know,

e  

d

​  

=−  

%change in price

%change in Demand

​  

=−  

20

20

​  

=−1

Now, if price rises from 10 to 13

% Change in price −  

10

3

​  

×100=30%

So,

% Change in Demand =% change in Price ×e  

d

​  

=30×−1=−30

So, we can say that if the price rises from Rs. 10 to Rs. 13, i.e by 30%, then the demand will fall by 30%. This is because the good follows unitary elasticity.