ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A consumer buys 5 units of a good at a price of Rs 4 per unit. When price falls to Rs 3 per unit he buys 10 units. Calculate Ed
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-0.3
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-0.20
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-0.5
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-0.16
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Explanation:
Detailed explanation-1: -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-2: -When price is 10 per unit, demand for a commodity is 100 units. As the price fallsto 8 per unit, demand expands to 150 units.
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