ECONOMICS (CBSE/UGC NET)

ECONOMICS

ELASTICITY OF DEMAND

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A consumer buys 100 units of good X at rs 5 per unit. The elasticity is (-)2. At what price will he be willing to buy 140 units of good X?

A	4
B	3
C	2
D	1

Explanation:

Detailed explanation-1: -when the price is is rs 5 per unit a consumer buys 40 unit of a commodity and his price elasticity of demand is-1.5 how much will he buy if the prices reduced to rs 4 per unit. Hence, the new quantity demanded is 52 units.

Detailed explanation-2: -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-3: -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)

Detailed explanation-4: -If price elasticity is exactly 1 (price change leads to an equal percentage change in demand), it is known as unitary elasticity.

There is 1 question to complete.