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A consumer buys 18 units of a good at a price of Rs. 9 per unit. The price elasticity of demand for the good is (-)1. How many units the consumer will buy at a price of Rs. 10 per unit ? Calculate. |
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Answer» Solution :`{:("Original Quantity (Q) = 18 unitsOriginal Price (P) = Rs. 9"),("New Quantity "(Q_(1))=? "New Price "(P_(1))=10),("Change in Quantity "(Delta Q)=? "Change in Price "(Delta P)=1),("ELASTICITY of Demand (ED) = "(-)1):}` `PED=(Delta Q)/(Delta P)xx(P)/(Q)` `-1=(Delta Q)/(1)xx(9)/(18)` `-2=Delta Q` As New Price is increasing from 9 to 10, quantity demanded MUST decrease by `Delta Q`. New Quantity = INITIAL Quantity `+Delta Q=18+(-2)=16` At Price = 10, Quantity demanded = 16. |
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