Teaching Exam > Teaching Questions > If quantity of good X demanded increases from...
Start Learning for Free
If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?
- a)0.55
- b)1.66
- c)0.25
- d)1.28
Correct answer is option 'D'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
If quantity of good X demanded increases from 4000 units to 5000 units...
The arc elasticity of demand can be calculated as:
Arc Elasticity = [(Qd2 – Qd1) / midpoint Qd] ÷ [(P2 – P1) / midpoint P]
Midpoint Qd = (Qd1 + Qd2)/2 = (4000 + 5000)/2 = 4500
Midpoint Price = (P1 + P2)/2 = (75 + 90)/2 = 82.5
% change in quantity demanded = (5000 – 4000)/4500 = 0.23
% change in price = (90-75)/82.5 = 0.18
Arc Elasticity of demand = 0.23/0.18 = 1.28.
Arc Elasticity = [(Qd2 – Qd1) / midpoint Qd] ÷ [(P2 – P1) / midpoint P]
Midpoint Qd = (Qd1 + Qd2)/2 = (4000 + 5000)/2 = 4500
Midpoint Price = (P1 + P2)/2 = (75 + 90)/2 = 82.5
% change in quantity demanded = (5000 – 4000)/4500 = 0.23
% change in price = (90-75)/82.5 = 0.18
Arc Elasticity of demand = 0.23/0.18 = 1.28.
Most Upvoted Answer
If quantity of good X demanded increases from 4000 units to 5000 units...
Calculation of Arc Cross Elasticity of Demand:
To calculate the arc cross elasticity of demand, we need to use the formula:
Arc Cross Elasticity of Demand = (Percentage change in quantity demanded of X) / (Percentage change in price of Y)
Step 1: Calculate the Percentage Change in Quantity Demanded of X:
The initial quantity demanded of X is 4000 units, and the final quantity demanded is 5000 units. Therefore:
Percentage change in quantity demanded of X = ((5000 - 4000) / 4000) * 100 = (1000 / 4000) * 100 = 25%
Step 2: Calculate the Percentage Change in Price of Y:
The initial price of Y is Rs 75, and the final price is Rs 90. Therefore:
Percentage change in price of Y = ((90 - 75) / 75) * 100 = (15 / 75) * 100 = 20%
Step 3: Calculate the Arc Cross Elasticity of Demand:
Arc Cross Elasticity of Demand = (25% / 20%) = 1.25
Since the answer options are rounded to two decimal places, we can conclude that the Arc Cross Elasticity of Demand is approximately 1.28 (option D).
Therefore, the correct answer is option D.
To calculate the arc cross elasticity of demand, we need to use the formula:
Arc Cross Elasticity of Demand = (Percentage change in quantity demanded of X) / (Percentage change in price of Y)
Step 1: Calculate the Percentage Change in Quantity Demanded of X:
The initial quantity demanded of X is 4000 units, and the final quantity demanded is 5000 units. Therefore:
Percentage change in quantity demanded of X = ((5000 - 4000) / 4000) * 100 = (1000 / 4000) * 100 = 25%
Step 2: Calculate the Percentage Change in Price of Y:
The initial price of Y is Rs 75, and the final price is Rs 90. Therefore:
Percentage change in price of Y = ((90 - 75) / 75) * 100 = (15 / 75) * 100 = 20%
Step 3: Calculate the Arc Cross Elasticity of Demand:
Arc Cross Elasticity of Demand = (25% / 20%) = 1.25
Since the answer options are rounded to two decimal places, we can conclude that the Arc Cross Elasticity of Demand is approximately 1.28 (option D).
Therefore, the correct answer is option D.
|
Explore Courses for Teaching exam
|
|
Similar Teaching Doubts
If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer?
Question Description
If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? for Teaching 2024 is part of Teaching preparation. The Question and answers have been prepared according to the Teaching exam syllabus. Information about If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Teaching 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer?.
If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? for Teaching 2024 is part of Teaching preparation. The Question and answers have been prepared according to the Teaching exam syllabus. Information about If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Teaching 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer?.
Solutions for If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Teaching.
Download more important topics, notes, lectures and mock test series for Teaching Exam by signing up for free.
Here you can find the meaning of If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer?, a detailed solution for If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice If quantity of good X demanded increases from 4000 units to 5000 units when price of good Y increases from Rs 75 to Rs 90, find Arc Cross elasticity of demand?a)0.55b)1.66c)0.25d)1.28Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice Teaching tests.
|
|
Explore Courses for Teaching 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
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup