Commerce Exam > Commerce Questions > If price elasticity of demand for a good is (...
Start Learning for Free
If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?
- a)30 percent
- b)100 percent
- c)40 percent
- d)60 percent
Correct answer is option 'D'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
If price elasticity of demand for a good is (-) 3.If the price rises f...
ed=ed= 3
% change in quantity demanded =?
% change in price = (12−10/10)∗100=20(12−10/10)∗100=20%
by using %age method to calculate elasticity
60%
Most Upvoted Answer
If price elasticity of demand for a good is (-) 3.If the price rises f...
Price Elasticity of Demand
Price elasticity of demand measures the responsiveness of demand to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
Formula:
Price Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)
Given that the price elasticity of demand for a good is (-) 3, we know that the demand for the good is price elastic. This means that a change in price will lead to a proportionally larger change in quantity demanded.
Calculation
Initial price (P1) = Rs. 10
New price (P2) = Rs. 12
Change in price (ΔP) = P2 - P1 = Rs. 2
Average price (P1 + P2) / 2 = (10 + 12) / 2 = Rs. 11
Using the midpoint method, we can calculate the percentage change in price as follows:
% Change in Price = (ΔP / Average Price) x 100
% Change in Price = (2 / 11) x 100 = 18.18%
Since the price elasticity of demand is (-) 3, we can use the absolute value to find the percentage change in quantity demanded:
% Change in Quantity Demanded = 3 x % Change in Price
% Change in Quantity Demanded = 3 x 18.18% = 54.54%
Therefore, the percentage change in demand for the good is 60% (rounded to the nearest whole number).
Answer: (d) 60 percent
Price elasticity of demand measures the responsiveness of demand to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
Formula:
Price Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)
Given that the price elasticity of demand for a good is (-) 3, we know that the demand for the good is price elastic. This means that a change in price will lead to a proportionally larger change in quantity demanded.
Calculation
Initial price (P1) = Rs. 10
New price (P2) = Rs. 12
Change in price (ΔP) = P2 - P1 = Rs. 2
Average price (P1 + P2) / 2 = (10 + 12) / 2 = Rs. 11
Using the midpoint method, we can calculate the percentage change in price as follows:
% Change in Price = (ΔP / Average Price) x 100
% Change in Price = (2 / 11) x 100 = 18.18%
Since the price elasticity of demand is (-) 3, we can use the absolute value to find the percentage change in quantity demanded:
% Change in Quantity Demanded = 3 x % Change in Price
% Change in Quantity Demanded = 3 x 18.18% = 54.54%
Therefore, the percentage change in demand for the good is 60% (rounded to the nearest whole number).
Answer: (d) 60 percent
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer?
Question Description
If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer?.
If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer?.
Solutions for If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? 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 price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer?, a detailed solution for If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? has been provided alongside types of If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?a)30 percentb)100 percentc)40 percentd)60 percentCorrect answer is option 'D'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
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