Question 3Yesterday, the price of envelopes was RM3 a box, and Ahmad was willing to buy 10 boxes. Today, the price has gone up to RM3.75 a box, and Ahmad is now willing to buy 8 boxes. What is Ahmads elasticity of demand?

ELASTICITY OF DEMAND

Please wait while the activity loads.
If this activity does not load, try refreshing your browser. Also, this page requires javascript. Please visit using a browser with javascript enabled.

If loading fails, click here to try again

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

Question 3Yesterday, the price of envelopes was RM3 a box, and Ahmad was willing to buy 10 boxes. Today, the price has gone up to RM3.75 a box, and Ahmad is now willing to buy 8 boxes. What is Ahmad’s elasticity of demand?

A	-1.00
B	-0.50
C	-0.30
D	-0.80

Explanation:

Detailed explanation-1: -Answer and Explanation: The correct answer is c. The income elasticity is 0.4 and the good is a normal good. The good is a normal good because demand rises as income rises.

Detailed explanation-2: -When a 5% increase in income causes a 3% drop in quantity demanded of a good: a. the income elasticity is 0.6 and the good is an inferior good.

Detailed explanation-3: -Elasticities can be usefully divided into five broad categories: perfectly elastic, elastic, perfectly inelastic, inelastic, and unitary.

Detailed explanation-4: -The cross-price elasticity formula is an equation for calculating the cross-price elasticity of demand (XED) of two separate products or services: Cross price elasticity (XED) = (% change in demand of product A) / (% change of price of product B), where products A and B are different offerings.

There is 1 question to complete.

ECONOMICS (CBSE/UGC NET)

ECONOMICS

ELASTICITY OF DEMAND