Question

a. Arrange the following coefficients of price elasticity of demand in ascending order: -0.7, -0.3, -1.1, -0.8

b. Comment upon the degree of elasticity of demand for Good X, using the total outlay method, if the price of X falls from Rs 18 per unit to Rs 13 per unit and its quantity demanded rises from 50 units to 100 units.

Answer 1

Ascending order: -0.3, -0.7,-0.8,-1.1.
(minus sign only represents the inverse relation between price and quantity demanded)

$\begin{array}{ccc}\text{Price (in Rs)}& \text{Quantity (in units)}& \text{Total outlay (in Rs)}\\ 18& 50& 900\\ 13& 100& 1300\end{array}$

CONCLUSION : The given data shows an iverse relation between Px and Total outlay, thus as per the total expenditure method, Ed > 1.