Question

that price?
(ANS: 1)
Question 17 When the price is Rs. 5 per unit a consumer buys 40 units of a commodity and its price elasticity of
demand is (-)1.5. How much will it buy if the price is reduced to Rs 4 per unit.
(ANS: 52 Units)​

Answer 1

Answer:

Price elasticity =proportionate change in Qty/Proportionate change in price

-1.5 = (∆q/Q)/(∆p/p)

-1.5 •(∆p/p) =∆q/q

-1.5.• -.1/.5) =+ (3/2) •1/5 =3/10

∆q/Q=3/10 =O.3

∆q = 0.3×Q = .3×40=12

Quantity bought=40+12 = 52