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A consumer demands 40 kg of a commodity when its price is Rs. 1 per kg. If the price increases by Rs. 0.10, what would be the quantity demanded ? PED =-1. |
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Answer» Solution :`{:("ELASTICITY of demand "=-1),("Original Quantity (Q) = 40Original PRICE (P) = 1"),("New Quantity "(Q_(1))=? "New Price "(P_(1))=1.1),("CHANGE in Quantity " (Delta Q)=? "Change in Price " (Delta P)=0.1):}` `PED =(Delta Q)/(Delta P)xx(P)/(Q) "or" -1=(Delta Q)/(0.1)xx(1)/(40)` `Delta Q=-4` As, price is increasing, then quantity demanded must decrease by 4. So, New Quantity = Initial quantity `+ Delta Q=40+(-4)=36` |
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