Advertisements
Advertisements
प्रश्न
Suppose the price elasticity of demand for a good is −0.2. How will the expenditure on the good be affected if there is a 10% increase in its price ?
उत्तर
Price elasticity of demand = −0.2
Percentage increase in price = 10%
`e_d = ( "Precentage change in demand ")/("Precentage change in price ")`
`0.2 = ( "Precentage change in demand ")/10`
−2 = Percentage change in demand
Thus, percentage decrease in demand is less than the percentage increase in price. This means that when price increases and ed < 1, the demand is inelastic and hence, the expenditure will increase.
APPEARS IN
संबंधित प्रश्न
When is the demand for a good said to be inelastic?
Explain the change in demand of a good on account of change in prices of related goods.
Give reasons or Explain the following statements.
All desires are not demand.
State whether the following statements are TRUE or FALSE with reason.
The demand for consumption goods is direct demand.
Choose the correct answer :
The demand of a salt is _________.
State Whether the following statements are TRUE or FALSE:
Demand will not increase by coming of new customers.
State Whether the following statements are TRUE or FALSE:
Demand elasticity concept is useful for labour unions.
Choose the correct answer :
Demand elasticity of habitual goods is _________.
Suppose the price elasticity of demand for a good is −0.2. If there is a 5% increase in the price of the good, then by what percentage will the demand for the good go down?
Suppose there was a 4% decrease in the price of a good, and as a result, the expenditure on the good increased by 2%. What can you say about the elasticity of demand ?
Distinguish between:
Increase in demand and Decrease in demand
Give economic terms.
Price being constant, demand falls due to unfavourable changes in other factors.
Distinguish between:
Increase in demand and Decrease in demand
