ECONOMICS (CBSE/UGC NET)

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ECONOMICS

ELASTICITY OF DEMAND

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Price elasticity of demand is (-) 1.5 At a given price the consumer buys 40 units of the good. How many units will the consumer buy if the price falls by 20 %
A
50
B
52
C
54
D
56
Explanation: 

Detailed explanation-1: -Answer and Explanation: The number of units which will be bought by the consumer if the price is reduced to Rs. 4 per unit is 52 units.

Detailed explanation-2: -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-3: -4, the demanded for the goods is 25 units.

Detailed explanation-4: -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-5: -If the change in quantity purchased is the same as the price change (say, 10% รท 10% = 1), then the product is said to have unit (or unitary) price elasticity. Finally, if the quantity purchased changes less than the price (say, -5% demanded for a +10% change in price), then the product is deemed inelastic.

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