price of muffins rose by 20% and total spending by him on muffins increase by 15%. what is the price elasticity of demand for muffins
Answers
price of muffins rose by 20% and total spending by him on muffins increase by 15%. what is the price elasticity of demand for muffins
Let say Earlier Price Of Muffin was Rs x
He used to buy muffins = y
Earlier expenses = xy
Increased muffin price = x + (20/100)x = 1.2x Rs
New Spending = xy + (15/100)xy = 1.15xy
Muffins purchased now = 1.15xy/1.2x = 0.9583y
Decrease in demand = y - 0.9583y = 0.0417y
% decrease in demand = 0.0417y/y * 100 = 4.17%
Demand decreased by 4.17%
Price increased by 20 %
price elasticity of demand = (%change in Qty demanded)/(% change in Price)
price elasticity of demand = -4.17/20 = -0.2085
cost of biscuits ascended by 20% and absolute spending by him on biscuits increment by 15%. what is the value versatility of interest for muffins
Let say Earlier Price Of Muffin was Rs x
He used to purchase biscuits = y
Prior costs = xy
Expanded biscuit cost = x + (20/100)x = 1.2x Rs
New Spending = xy + (15/100)xy = 1.15xy
Biscuits acquired now = 1.15xy/1.2x = 0.9583y
Decline sought after = y - 0.9583y = 0.0417y
% decline sought after = 0.0417y/y * 100 = 4.17%
Request diminished by 4.17%
Cost expanded by 20 %
value versatility of interest = (%change in Qty requested)/(% change in Price)
value versatility of interest = -4.17/20 = -0.2085