Demand increases by 10 units when …
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Demand increases by 10 units when the price decreases by Rs.2 . As a result , demand increases to 100 units and price decreases to Rs.8 .Find out the price elasticity of demand.
Posted by Bhavya Dwivedy 8 years, 2 months ago
- 3 answers
Bhavya Dwivedy 4 years, 3 months ago
thanks for your answer .
but in my book answer for same question is given -0.55
Anuj Goel 8 years, 2 months ago
NEW QUANTITY DEMANDED = 100 UNITS NEW PRICE = RS. 8
CHANGE IN QUANTITY DEMANDED = 10 UNITS CHANGE IN PRICE = RS. -2
ORIGINAL QUANTITY DEMANDED = 90 UNITS ORIGINAL PRICE = RS. 10
ELASTSCITY = (CHANGE IN PRICE * ORIGINAL QUANTITY DEMANDED)/(CHANGE IN QUANTITY DEMANDED * ORIGINAL PRICE)
= (-2*90)/(10*10)
= -1.8
NEGATIVE SIGN IS DUE TO INVERSE RALATION.
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Meghna Surana 8 years, 2 months ago
Given,
change in Q = 10 change in P = -2
Q1 = 100 P1= 8
Q=? P=?
we know,
change in Q = Q1 - Q change in P = P1- P
Q=100-10 = 90 P= 10
Ed = CHANGE IN Q / change in price x original P / orignal Q
= 10/-2 X 10/90
= -5/9
= -0.55
1Thank You