With his given money income, a consumer can buy 10 units commodity X or 15
units of commodity Y. If the income of the consumer is 150, find out the prices of
commodity X and commodity Y.
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Answer:
Given information:
Initial Price (P0) = Rs 4
Fall in Price by 25% = 4 ×25100 = Rs 1New Price (P1) = Rs 4 − Rs 1 = Rs 3
Initial Quantity (Q0)= 50 units
New Quantity (Q1) = 100 units
Change in Quantity = Q1 - Q0
= 100 - 50 = 50 units
Elasticity of Demand = (−) PQ × Change in QuantityChange in Price = (−) 450 × 50−1 = 4
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