wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

A consumer spends Rs.1,000 on a good price at Rs.8 per unit. When price rises by 25 per cent, the consumer continues to spend Rs.1,000 on the good. Calculate price elasticity of demand by percentage method.

Open in App
Solution

Initial price (P)=Rs.8
Rise is price by 25 per cent =8×25100=Rs.2
New price (P1)=Rs.8+Rs.2=Rs.10
Given, P=Rs.8;P1=Rs.10;P=P1P=Rs.10Rs.8=Rs.2
Q=1,0008=125 units;Q1=1,00010=100 units;Q=Q1Q=(100125)units=()25units
Price elasticity of demand (Ed)=()PQ×QP
=()8125×252
=45=0.8
Price elasticity of demand =0.8.

flag
Suggest Corrections
thumbs-up
1
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Percentages and Why Percentages
MATHEMATICS
Watch in App
Join BYJU'S Learning Program
CrossIcon