Price of a good falls from Rs . 100 to Rs 80. As a result its demand rises from 4000 units to 5000 units Calculate Price Electricity of Demand
Answers
Answered by
1
Explanation:
Answer
Given, P=Rs.20; P
1
=Rs.23;
△P=P
1
−P=Rs.23−Rs.20=Rs.3
Percentage change in price =
P
△P
×100=
20
3
×=15 per cent
Percentage change in quantity demanded =(−)30 per cent
Price elasticity of demand (E
d
)=(−)
Percentagechangeinprice
Percentagechangein quantitydemanded
=(−)
15%
−30%
= 2
Price elasticty of demand =2.
Answered by
0
Concept:
As the price of any good falls, the demand increases. Price and demand are inversely proportional.
Given:
P= Rs.100
P1= Rs.80
Q= 4000
Q1= 5000
Find:
We have to find the price elasticity of demand.
Solution:
^P= 80-100= -20
^Q= 5000-4000= 1000
Ed= ^Q/ ^P x P/Q
Ed= 1000/-20 x 100/4000
Ed= 1.25
The price elasticity of demand is 1.25
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