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A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate?
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A 5% fall in price of a good leads to 10% rise in its demand A consume...
A 5% fall in price of a good leads to 10% rise in its demand. A consumer buys 40 units of a good at a price of 10 per unit. At a price of 12 per unit, he would buy 36 units. This is calculated by taking the percentage decrease in price (10%) and dividing it by the percentage increase in demand (10%). The result is 1, meaning for every 1% decrease in price, demand increases by 1%. Therefore, if the price is increased by 2, the demand will decrease by 20%. 40 units divided by 1.2 (20% decrease) is 36 units.
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A 5% fall in price of a good leads to 10% rise in its demand A consume...
Given:
- A 5% fall in price leads to a 10% rise in demand.
- The consumer buys 40 units of the good at a price of $10 per unit.
To Find:
- How many units will the consumer buy at a price of $12 per unit.
Calculation:
We can solve this problem using the concept of price elasticity of demand. Price elasticity of demand measures the responsiveness of the quantity demanded to a change in price.
Step 1: Calculate the price elasticity of demand:
The price elasticity of demand formula is given by:
Elasticity = (% change in quantity demanded) / (% change in price)
In this case, we know that a 5% fall in price leads to a 10% rise in demand. So the percentage change in quantity demanded is 10% and the percentage change in price is -5% (fall in price).
Elasticity = (10% / -5%) = -2
Step 2: Use the price elasticity of demand to calculate the new quantity demanded:
The price elasticity of demand tells us how much the quantity demanded will change in response to a change in price. In this case, with an elasticity of -2, a 1% increase in price will lead to a 2% decrease in quantity demanded.
Since the price has increased from $10 to $12 per unit (a 20% increase), we can calculate the percentage change in quantity demanded as follows:
Percentage change in quantity demanded = (20% * -2) = -40%
Step 3: Calculate the new quantity demanded:
We know that the consumer originally buys 40 units of the good at a price of $10 per unit. Therefore, the percentage change in quantity demanded is relative to the original quantity:
New quantity demanded = (40 units * -40%) = -16 units
Since negative quantities do not make sense in this context, we can ignore the negative sign and take the absolute value:
New quantity demanded = 16 units
Answer:
The consumer will buy 16 units of the good at a price of $12 per unit.
- A 5% fall in price leads to a 10% rise in demand.
- The consumer buys 40 units of the good at a price of $10 per unit.
To Find:
- How many units will the consumer buy at a price of $12 per unit.
Calculation:
We can solve this problem using the concept of price elasticity of demand. Price elasticity of demand measures the responsiveness of the quantity demanded to a change in price.
Step 1: Calculate the price elasticity of demand:
The price elasticity of demand formula is given by:
Elasticity = (% change in quantity demanded) / (% change in price)
In this case, we know that a 5% fall in price leads to a 10% rise in demand. So the percentage change in quantity demanded is 10% and the percentage change in price is -5% (fall in price).
Elasticity = (10% / -5%) = -2
Step 2: Use the price elasticity of demand to calculate the new quantity demanded:
The price elasticity of demand tells us how much the quantity demanded will change in response to a change in price. In this case, with an elasticity of -2, a 1% increase in price will lead to a 2% decrease in quantity demanded.
Since the price has increased from $10 to $12 per unit (a 20% increase), we can calculate the percentage change in quantity demanded as follows:
Percentage change in quantity demanded = (20% * -2) = -40%
Step 3: Calculate the new quantity demanded:
We know that the consumer originally buys 40 units of the good at a price of $10 per unit. Therefore, the percentage change in quantity demanded is relative to the original quantity:
New quantity demanded = (40 units * -40%) = -16 units
Since negative quantities do not make sense in this context, we can ignore the negative sign and take the absolute value:
New quantity demanded = 16 units
Answer:
The consumer will buy 16 units of the good at a price of $12 per unit.
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A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate?
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A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate? for Class 11 2024 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate?.
A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate? for Class 11 2024 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A 5% fall in price of a good leads to 10% rise in its demand A consumers buys 40 units of a good at a price of 10 per unit how many unit will he buy at a price of 12 per unit calculate?.
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