Question

the price elasticity of demand of commodity is -0.5. at a price of 20 rs per unit, total expenditure on it is 2000 rs. its price is reduced by 10 percent. calculate its demand at reduced rate

Answer 1

Answer:

In reality we often come across one or two sur­prising facts. For example, we observe that an in­crease in supply of an agricultural commodity, be­cause of a bumper crop or import of cheap corn from abroad, is likely to reduce its price. This fall in price is unlikely to raise demand because consump­tion of stable agricultural crops remain more or less unchanged in all situations.