The quantity demanded of a commodity at a price of rs 8 per unit is 500 units. Its price falls to rs 6 and as a result its quantity demanded rises of 600 units. Calculate its price elasticity.
Answers
Explanation:
Percentage change in price= 25%(given)
Total units= 600 units (given)
Change in quantity demanded= 120 units (given)
So, percentage change in demand= 120∕600 × 100= 20%
The elasticity of demand= % of change in demand÷% of change in price = 20÷25= 0.8 %
∴ the demand is not elastic as the value is less than unity.
Explanation:
Price elasticity of demand shows the sensitiveness or elasticity of change in demand for goods or services in response to the change in price.
0.8%
Explanation:
Percentage change in price= 25%(given)
Total units= 600 units (given)
Change in quantity demanded= 120 units (given)
So, percentage change in demand= 120∕600 × 100= 20%
The elasticity of demand= % of change in demand÷% of change in price = 20÷25= 0.8 %
∴ the demand is not elastic as the value is less than unity.
In business and economics, price elasticity refers to the degree to which individuals, consumers, or producers change their demand or the amount supplied in response to price or income changes. It is predominantly used to assess the change in consumer demand as a result of a change in a good or service's price.
#SPJ2
https://brainly.in/question/21801487
https://brainly.in/question/16851212