ECONOMICS
ELASTICITY OF DEMAND
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Question
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A consumer buys 10 units of good x at a price of Rs 5 per unit. The price elasticity of demand for this demand for this good is 2 . Price falls to Rs 4 per unit. How many units of good X will he now buy at this price?
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14
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15
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16
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17
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Explanation:
Detailed explanation-1: -A decline in the price of good X by Rs. 5 causes an increase in its demand by 20 units to 50 units. The new price is X 15.
Detailed explanation-2: -When price of the commodity reduces from 5 per unit to 4 per unit, expenditure on thecommodity reduces from 60 to 48. Find price elasticity of demand by percentage method. (Ans. E= 0 (zero)
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