When the price of good raises …

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Sia ? 6 years, 3 months ago
Old Price (P) = Rs 10
New Price = Rs 12
Change in Price ({tex}\Delta{/tex}P) = Rs 2( 12 - 10)
Percentage Change in Price
{tex}= \frac { \text { Change in Price } } { \text { Old Price } } \times 100{/tex}
{tex}= \frac { 2 } { 10 } \times 100 = 20 \%{/tex}
Percentage change in quantity demanded = -20% ( since the quantity demand has fallen by 20%)
(given)
We know that, Elasticity of Demand
Ed = - {tex}\frac { \text { Percentage Change in Quantity Demanded } } { \text { Percentage Change in Price}}{/tex}
= (-){tex}\frac { 20 } { 20 } ={/tex}(-)1
Now according to the given condition,
Old Price (P) = Rs 10
New Price = Rs 13 .
{tex}\therefore{/tex}Change in price = Rs 3(13 - 10)
Percentage Change in Price
{tex}= \frac { \text { Change in Price } } { \text { Old Price } } \times 100{/tex}={tex}\frac { 3 } { 10 } \times 100{/tex}= 30%
Elasticity of Demand (Ed)
{tex}- 1 = \frac { \text { Percentage Change in Quantity Demanded } } { 30 }{/tex}
So, Percentage change in quantity demanded =30%
therefore, the quantity demanded will fall by 30% when price rises from Rs 10 to Rs13.
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