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The price elasticity of supply of commodityX and Y areequal. Theprice ofX fallsfrom ₹10 to ₹8 per unit and itsquantity suppliedfalls by 16 per unit.The price of Y rises by 10 percent. Calculate the precentageincrease increase in itssupply. |
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Answer» <P> Solution :PED of X = PED of Y [Given]`{:("Commodity X","Commodity Y"),("Initial Price [P] = 10 (given)","PED = Y = 1 [As PED of X and Y are equal]"),("New Price "[P_(1)]=8,),(Delta P=-2,),("Percentage CHANGE in Price",),(=(Delta P)/(P)xx100=(-2)/(10)xx100=(-)20%,PED=("Percentage change in QUANTITY DEMANDED")/("Percentage change in Price")),("Percentage change in quantity demanded = 20%",),(PED=("Percentage change in Quantity demanded")/("Percentage change in Price"),1=("Percentage change in Quantity demanded")/(10%)),(=(20%)/((-)20%)=(-)1,"As price of Y increases by 10%, than"),(PED=1,"quantity demanded for y fall by 10%."):}` Numerical Problem to Calculate Price Elasticity of Demand by Total Expenditure Method. |
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