Saved Bookmarks
| 1. |
The market demand for a good at Rs. 5 per unit is 50 units. Due to increase in price, the market demand falls to 30 units. Find out the new price if the price elasticity of demand is (-)2. |
|
Answer» Solution :`{:("ORIGINAL Quantity (Q) = 50 unitsOriginal Price (P) = RS. 5"),("New Quantity "(Q_(1))=30 " unitsNew Price "(P_(1))=?),("Change in Quantity "(Delta Q)=-20 " unitsChange in Price "(Delta P)=Delta P),("Elasticity of Demand (ED) = "(-)2):}` Price Elasticity of demand (ED) `=(Delta Q)/(Delta P)xx(P)/(Q)` `-2=(-20)/(Delta P)xx(5)/(50)=Delta P=Rs. 1` As the quantity demanded is decreasing, price will INCREASE. It means, New Price = Original Price (P) + Change in Price `(Delta P) = 5+1=Rs. 6` New Price = Rs. 6 |
|