Commerce Exam > Commerce Questions > If 2% increase in px is accompained with cons...
Start Learning for Free
If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.?
Most Upvoted Answer
If 2% increase in px is accompained with constant expendituer on the c...
Your Answer. True. Because increase in price is not causing any change in expendituer on the commodity. Thank u.
Community Answer
If 2% increase in px is accompained with constant expendituer on the c...
Explanation:
Introduction:
The elasticity of demand measures the responsiveness of the quantity demanded of a commodity to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the elasticity of demand is equal to 1, it implies that the quantity demanded changes exactly proportionally to the change in price.
Scenario:
In this scenario, a 2% increase in the price of a commodity is accompanied by a constant expenditure on the commodity. This means that despite the increase in price, consumers continue to spend the same amount of money on the commodity.
Elasticity of Demand:
Given that the elasticity of demand is equal to 1, it indicates that the percentage change in quantity demanded is equal to the percentage change in price. In other words, a 2% increase in price will result in a 2% decrease in quantity demanded.
Constant Expenditure:
When there is a constant expenditure on a commodity, it implies that consumers are willing to adjust the quantity demanded in response to changes in price to maintain their total spending on the commodity. This is achieved by decreasing the quantity demanded when the price increases.
Example:
Let's consider an example to illustrate this concept. Suppose the price of a commodity is $10 and the quantity demanded is 100 units. If the price increases by 2% to $10.20, the quantity demanded will decrease by 2% to 98 units.
Constant Expenditure Calculation:
To calculate the constant expenditure, we multiply the initial price by the initial quantity demanded and compare it with the new price multiplied by the new quantity demanded. In this case, the initial expenditure is $10 * 100 = $1000 and the new expenditure is $10.20 * 98 = $999.60. Despite the increase in price, the expenditure remains constant at $1000.
Conclusion:
In conclusion, if a 2% increase in price is accompanied by a constant expenditure on the commodity, the elasticity of demand will be equal to 1. This implies that the quantity demanded will change exactly proportionally to the change in price, resulting in a constant expenditure.
Introduction:
The elasticity of demand measures the responsiveness of the quantity demanded of a commodity to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the elasticity of demand is equal to 1, it implies that the quantity demanded changes exactly proportionally to the change in price.
Scenario:
In this scenario, a 2% increase in the price of a commodity is accompanied by a constant expenditure on the commodity. This means that despite the increase in price, consumers continue to spend the same amount of money on the commodity.
Elasticity of Demand:
Given that the elasticity of demand is equal to 1, it indicates that the percentage change in quantity demanded is equal to the percentage change in price. In other words, a 2% increase in price will result in a 2% decrease in quantity demanded.
Constant Expenditure:
When there is a constant expenditure on a commodity, it implies that consumers are willing to adjust the quantity demanded in response to changes in price to maintain their total spending on the commodity. This is achieved by decreasing the quantity demanded when the price increases.
Example:
Let's consider an example to illustrate this concept. Suppose the price of a commodity is $10 and the quantity demanded is 100 units. If the price increases by 2% to $10.20, the quantity demanded will decrease by 2% to 98 units.
Constant Expenditure Calculation:
To calculate the constant expenditure, we multiply the initial price by the initial quantity demanded and compare it with the new price multiplied by the new quantity demanded. In this case, the initial expenditure is $10 * 100 = $1000 and the new expenditure is $10.20 * 98 = $999.60. Despite the increase in price, the expenditure remains constant at $1000.
Conclusion:
In conclusion, if a 2% increase in price is accompanied by a constant expenditure on the commodity, the elasticity of demand will be equal to 1. This implies that the quantity demanded will change exactly proportionally to the change in price, resulting in a constant expenditure.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.?
Question Description
If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.?.
If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.?.
Solutions for If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? defined & explained in the simplest way possible. Besides giving the explanation of
If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.?, a detailed solution for If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? has been provided alongside types of If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? theory, EduRev gives you an
ample number of questions to practice If 2% increase in px is accompained with constant expendituer on the commodity, elasticity of demand = 1.? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup