Advertisements
Advertisements
प्रश्न
A consumer spends Rs 400 on a good priced at Rs 8 per unit. When its price rises by 25 percent, the consumer spends Rs 500 on the good. Calculate the price elasticity of demand by the Percentage method.
उत्तर
Given:
Actual Total Expenditure (TE0) = Rs 400
Change Total Expenditure (TE1) = Rs 500
Actual Price (P0) = Rs 8
Percentage change in price = +25
Percentage change in price = `(P_1 - P_0)/P_0 xx 100`
`25 = (P_1 - 8)/8 xx 100`
`200/100 = P-1- 8`
`P_1 = 10`
Therefore,
| Price (P) | Total Expenditure (TE) = Price (P) × Quantity (Q) |
Quantity (Q) = `"TE"/P` |
| P0 = Rs 8 | TE0 = Rs 400 | Q0 = 50 |
| P1 = Rs 10 | TE1 = Rs 5 | Q1= 50 |
herefore,
Ed = (-) `"Percentage change in quantity demanded"/"Percentage change in price"`
Ed = (-) `("Changeindemand"/"Actualdemand" xx 100)/(-25)`
Ed = `((Q_1 -Q_0)/Q_0 xx 100)/(25)`
Ed = (-) `((50 - 50)/50 xx 100)/(25)`
∴ Ed = 0
Thus, the price elasticity of demand is 0
APPEARS IN
संबंधित प्रश्न
Income elasticity of demand for inferior goods is negative.
A consumer spends Rs 1000 on a good priced at Rs 8 per unit. When price rises by 25 percent, the consumer continues to spend Rs 1000 on the good. Calculate the price elasticity of demand by percentage method.
A consumer spends Rs 1,000 on a good priced at Rs10 per unit. When its price falls by 20 percent, the consumer spends Rs800 on the good. Calculate the price elasticity of demand by the Percentage method
When the price of good rises from Rs10 to Rs12 per unit, its demand falls from 25 units to 20 units. What can you say about price elasticity of demand of the good through the 'expenditure approach'?
A consumer buys 10 units of a commodity at a price of Rs. 10 per unit. He incurs an expenditure of Rs 200 on buying 20 units. Calculate price elasticity of demand by the percentage method. Comment upon the shape of demand curve based on this information.
State whether the following statement is True or False :
Concept of elasticity of demand is useful for finance minister.
Give reasons or explain the following statements
Demand for basic necessities is inelastic.
What do you mean by a normal good?
What do you mean by complements? Give examples of two goods which are complements of each other.
Fill in the blank with appropriate alternatives given below:
Income elasticity of demand for inferior goods is __________.
Fill in the blank with appropriate alternatives given below:
Cross elasticity of demand is applicable to ____________ goods.
Fill in the blank with appropriate alternatives given below:
The slope of demand curve is _______________ in case of inelastic demand.
Give reason or explain the following statement:
Demand for habitual goods is inelastic.
Define price elasticity of demand.
If quantity supplied increases by 60% due to a 50% increase in price, then elasticity of supply is ______
What will be the effect on price elasticity of demand, if the time required to find the substitute product is more.
Identify the correctly matched pair from the items in Column A by matching them to the items in column B:
| Column A | Column B |
| 1. Increase or decrease in demand for a commodity does not cause any change in its price. | (a) Effect on supply, in the case of Perfectly Elastic Demand. |
| 2. Increase or decrease in demand causes a change in the price of the commodity. Equilibrium quantity remains constant. | (b) Effect on demand, in the case of Perfectly Inelastic Supply. |
| 3. Increase or decrease in demand cause a change in the price of the commodity. Equilibrium quantity remains constant. | (c) Effect on demand, in the case of Perfectly Elastic Supply. |
| 4. Increase or decrease in demand for a commodity does not cause any change in its price. | (d) Effect on supply, in the case of Perfectly Elastic Demand. |
Identify the correctly matched pair from the items in Column A by matching them to the items in Column B:
| Column A | Column B | ||
| 1 | Relatively Inelastic Demand | (a) | ed > 1 |
| 2 | Relatively Elastic Demand | (b) | ed < 1 |
| 3 | Perfectly Inelastic Demand | (c) | ed = 0 |
| 4 | Perfectly Elastic Demand | (d) | ed = 1 |
State with reasons whether you agree or disagree with the following statement:
The elasticity of demand gets influenced by the nature of the commodity.
