Economy, asked by kaursukhdeep124620, 1 month ago

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Answered by Anonymous
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Given : The market demand for a good at Rs. 4 per unit is 100 units. Due to increase in price, the market demand falls to 75 units. Price elasticity is 1.

To find : New price of the commodity

Solution :

According to the given information, we have :

  •  \sf E_{(d)} = 1 \{Price\: Elasticity\}
  •  \sf P = Rs. 4 \{Old\:price\}
  •  \sf \Delta Q = 100-75 = 25\{Change\:in\: quantity\: demanded\}
  •  \sf Q = 100 \{Quantity\:demanded\}

We have formula for elasticity of demand,

\sf\implies E_{(d)} = \dfrac{\%Change\:in\: quantity\: demanded}{\%Change\:in\: price}

\sf\implies E_{(d)} = \dfrac{\dfrac{\Delta\: Q\times 100}{Q}}{\dfrac{\Delta\: P\times 100}{P}}

\sf\implies1 = \dfrac{\dfrac{25}{100}}{\dfrac{\Delta P}{4}}

 \pink{ \boxed{\sf\implies1 = \Delta\: P}}

Therefore,

New price = Rs. 4 + Rs. 1 = Rs. 5

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