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If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6?
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If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percent...
Calculation of Percentage Fall in Demand
Using the formula for price elasticity of demand:
Price Elasticity of Demand = Percentage change in quantity demanded / Percentage change in price
We can rearrange the formula to get:
Percentage change in quantity demanded = Price Elasticity of Demand x Percentage change in price
Substituting the given values:
-2 = Percentage change in quantity demanded / 0.2
Percentage change in quantity demanded = -2 x 0.2 = -0.4 or -40%
Therefore, the percentage fall in demand is 40%.
Calculation of Original Expenditure
To calculate the original expenditure, we can use the formula:
Expenditure = Price x Quantity
Let the original price be P and the original quantity be Q. We know that the new price is ₹6 and the new expenditure is ₹180. Substituting these values:
₹180 = ₹6 x Quantity
Quantity = ₹180 / ₹6 = 30
Therefore, the original quantity demanded is 30.
Using the same formula, we can calculate the original expenditure:
Original Expenditure = Original Price x Original Quantity
Substituting the values:
Original Expenditure = P x 30
We don't have enough information to calculate the original price, so we cannot determine the original expenditure.
Explanation
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. A price elasticity of -2 means that a 1% increase in price will lead to a 2% decrease in quantity demanded, and vice versa.
The formula for calculating percentage change in quantity demanded is derived from the formula for price elasticity of demand. By multiplying the price elasticity by the percentage change in price, we can find the percentage change in quantity demanded.
The formula for expenditure is simply the product of price and quantity. By using the given values, we can calculate the original quantity demanded. However, we do not have enough information to calculate the original price, so we cannot determine the original expenditure.
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If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6?
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If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6?.
If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If delta P/ P = 0.2 And price elasticity is -(2) Calculate the percentage fall in demand and also calculate the original expenditure if new expenditure is ₹180 at price of ₹6?.
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