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Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5?
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Price of commodity decreases from Rs. 6 to Rs 4 and the quantity deman...
Calculation of Coefficient of Price Elasticity using Point Method
Given data:
Initial price (P1) = Rs. 6
New price (P2) = Rs. 4
Initial quantity demanded (Q1) = 10 units
New quantity demanded (Q2) = 15 units
Formula:
Price Elasticity of Demand (Ed) = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))
Step 1: Calculate the percentage change in price
Percentage change in price = ((P2 - P1) / P1) x 100
= ((4 - 6) / 6) x 100
= -33.33%
Step 2: Calculate the percentage change in quantity demanded
Percentage change in quantity demanded = ((Q2 - Q1) / Q1) x 100
= ((15 - 10) / 10) x 100
= 50%
Step 3: Calculate the midpoint
Midpoint = (Q2 + Q1) / 2, (P2 + P1) / 2
= (15 + 10) / 2, (4 + 6) / 2
= 12.5, 5
Step 4: Calculate the coefficient of price elasticity
Ed = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))
= (50% / 12.5) / (-33.33% / 5)
= 4 / (-1.6667)
= -2.4
Step 5: Interpret the result
The coefficient of price elasticity is -2.4, which means that the commodity is highly elastic. This implies that a decrease in price will lead to a proportionately larger increase in the quantity demanded.
Given data:
Initial price (P1) = Rs. 6
New price (P2) = Rs. 4
Initial quantity demanded (Q1) = 10 units
New quantity demanded (Q2) = 15 units
Formula:
Price Elasticity of Demand (Ed) = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))
Step 1: Calculate the percentage change in price
Percentage change in price = ((P2 - P1) / P1) x 100
= ((4 - 6) / 6) x 100
= -33.33%
Step 2: Calculate the percentage change in quantity demanded
Percentage change in quantity demanded = ((Q2 - Q1) / Q1) x 100
= ((15 - 10) / 10) x 100
= 50%
Step 3: Calculate the midpoint
Midpoint = (Q2 + Q1) / 2, (P2 + P1) / 2
= (15 + 10) / 2, (4 + 6) / 2
= 12.5, 5
Step 4: Calculate the coefficient of price elasticity
Ed = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))
= (50% / 12.5) / (-33.33% / 5)
= 4 / (-1.6667)
= -2.4
Step 5: Interpret the result
The coefficient of price elasticity is -2.4, which means that the commodity is highly elastic. This implies that a decrease in price will lead to a proportionately larger increase in the quantity demanded.
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Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5?
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Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5? 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 Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5?.
Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5? 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 Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Price of commodity decreases from Rs. 6 to Rs 4 and the quantity demanded of goods increases from 10 units to 15 units. Find the coefficient of price elasticity. ( point method) 1 point 1.5 2 0.5 2.5?.
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