Question

The price elasticity of demand of commodity x and Y are - 5 and - 1 respectively. Identify the correct statement.
(1 Point)
X is more elastic then Y
Y is more elastic than x
Both are equally elastic
Both are in elastic

Answer 1

Answer:

If E

d

=1 for commodity - Y

E

d

=2 for commodity - X

∴5 per cent rise in price of Y should mean 5 per cent decrease in quantity of Y and 5 per cent fall in price of X should mean 10 per cent in quantity of X.

Quantity of X will increase by 10 per cent, and quantity of Y will decrease by 5 per cent.

Answer 2

Explanation:

If Ed =1 for commodity - Y

Ed =2 for commodity - X

∴5 per cent rise in price of Y should mean 5 per cent decrease in quantity of Y and 5 per cent fall in price of X should mean 10 per cent in quantity of X.

Quantity of X will increase by 10 per cent, and quantity of Y will decrease by 5 per cent.

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