ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Percentage change in the price of Good A / Percentage change in the quantity of Good B
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Percentage change in the quantity of Good A / Percentage change in the quantity of Good B
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Percentage change in the price of Good A / Percentage change in the price of Good B
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Percentage change in the quantity of Good A / Percentage change in the price of Good B
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Detailed explanation-1: -Cross elasticity (Exy) tells us the relationship between two products. it measures the sensitivity of quantity demand change of product X to a change in the price of product Y. Price elasticity formula: Exy = percentage change in Quantity demanded of X / percentage change in Price of Y..
Detailed explanation-2: -Formula to measure cross elasticity of demand: E= Percentage change in demand of commodity X/ Percentage change in price of commodity Y. Q.
Detailed explanation-3: -The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price. The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.
Detailed explanation-4: -If the percentage change is not given in a problem, it can be computed using the following formula: Percentage change in Qd = (Q1-Q2) / [1/2 (Q1+Q2)] where Q1 = initial Qd, and Q2 = new Qd.
Detailed explanation-5: -(New Quantity – Initial Quantity) / Initial Quantity. (New Price – Initial Price) / Initial price. Cross-price Elasticity of Demand (XED) = Percentage Change in Quantity Demanded of Product A / Percentage Change in Price of Product B. 12-Oct-2022