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PED =[-]1. A consumer demands 50 units of a commodity when price is Rs. 1 per unit. At what price price will he demands 45 kg of a commodity ? |
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Answer» Solution :`{:("Elasticity of demand = unity"[-]1),("Original QUANTITY (Q) = 50Original Price (P) = 1"),("New Quantity "(Q_(1))=45 "New Price "(P_(1))=?),("CHANGE in Quantity " (DELTA Q)=[-]5 "Change in Price " (Delta P)=Delta P):}` `PED = (Delta Q)/(Delta P)xx(P)/(Q) "or" [-]1=([-]5)/(Delta P)xx(1)/(50)` `Delta P=(1)/(10)=0.1` As quamtity demanded is decreasing, then price must increase by 0.1. New Price = Initial Price `+Delta P=1+0.1=1.1` |
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