The demand function of good x is given as Qx = 40 - 2x. Calculate price elasticity of demand when price rises from Rs 4 to Rs5/unit.
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Calculate total utility for the various units of commodity-X, given the following As a result of 10 per cent fall in price of a good, its demand rises from 100 units
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Answer:
Qx = Demand
x = Price
Given: Qx = 40 - 2x
Case - i: Price is ₹4
Qx = 40 - 2(4) = 32
Case - i: Price is ₹5
Qx = 40 - 2(5) = 30
Therefore,
Initial Price: ₹4
Final Price: ₹5
Change in Price: 1
Initial Demand: 32
Final Demand: 30
Change in Demand: 2
Ped = Change in Demand/Change in Price * Price/Demand
Ped = 2/1 * 4/32
Ped = 8/32
Ped = 0.25
Ped < 1
Relatively Inelastic.
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