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When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand?
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When price of radio is Rs. 500 then quantity demanded is 100 and when ...
Calculation of Price Elasticity of Demand
- Price of radio (P1) = Rs. 500
- Quantity demanded (Q1) = 100
- Price of radio (P2) = Rs. 400
- Quantity demanded (Q2) = 150
Formula for Price Elasticity of Demand
Price Elasticity of Demand (PED) = % Change in Quantity Demanded / % Change in Price
Calculating the Percentage Change in Quantity Demanded
Percentage Change in Quantity Demanded = ((Q2 - Q1) / ((Q1 + Q2) / 2)) x 100
- Percentage Change in Quantity Demanded = ((150 - 100) / ((100 + 150) / 2)) x 100
- Percentage Change in Quantity Demanded = (50 / 125) x 100
- Percentage Change in Quantity Demanded = 40%
Calculating the Percentage Change in Price
Percentage Change in Price = ((P2 - P1) / ((P1 + P2) / 2)) x 100
- Percentage Change in Price = ((400 - 500) / ((500 + 400) / 2)) x 100
- Percentage Change in Price = (-100 / 450) x 100
- Percentage Change in Price = -22.22%
Calculating the Price Elasticity of Demand
Price Elasticity of Demand (PED) = % Change in Quantity Demanded / % Change in Price
- Price Elasticity of Demand (PED) = 40% / -22.22%
- Price Elasticity of Demand (PED) = -1.8
Interpreting the Value of Price Elasticity of Demand
The value of Price Elasticity of Demand is greater than 1, so the demand for radios is elastic. This means that a small change in price will cause a relatively larger change in the quantity demanded. Therefore, if the price of radios is decreased, the quantity demanded will increase significantly.
Community Answer
When price of radio is Rs. 500 then quantity demanded is 100 and when ...
Elasticity of demand = change in quantity/change in price
50/100= 0.5
50/100= 0.5
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When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand?
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When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand?.
When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When price of radio is Rs. 500 then quantity demanded is 100 and when price falls to Rs 400 demanded rises to 150. What will be value of price Elasticity of demand?.
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