Question

At a prize of Rs. 10 per unit the demand of a commodity is 200 units. Its prize elasticity of demand is (-)1×5. At what prize will the demand be 250 units?​

Answer 1

Ans- Given:- 200 units at the rate of Rs. 10/units

250 units at the rate of ?

Ep=-1.5

So, quality demanded price

200 10

250 x

Ep = ∆Q/∆P × P/Q

= 50/10-x = 10/200 = 1.5

= 5 = -1.5×2(10-x)

= x = 11.66

So, at 11.66 per unit 250 units will be demanded.

Answer 2

250 units would be demanded when price is $11.67.

What is price elasticity of demand?

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price

What is the price?

Percentage change in the quantity demanded = (250 / 200) - 1 = 25%

Percentage change in price = 25% / 1.5 = 16.67

Price = (1 + 0.1667) x 10 = 11.67

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