CA Foundation Exam > CA Foundation Questions > If Price of Coffee decreases from 5 tot 4.50,...
Start Learning for Free
If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -?
Most Upvoted Answer
If Price of Coffee decreases from 5 tot 4.50, and as a result the Cons...
Calculating the Absolute Price Elasticity of Demand
To calculate the absolute price elasticity of demand, we need to use the following formula:
|Ep| = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))
Where:
- Q1 = initial quantity demanded
- Q2 = new quantity demanded
- P1 = initial price
- P2 = new price
Applying the Formula
Using the information given in the question, we can apply the formula as follows:
Q1 = 60 grams
Q2 = 75 grams
P1 = $5
P2 = $4.50
|Ep| = ((75 - 60) / ((75 + 60) / 2)) / (($4.50 - $5) / (($4.50 + $5) / 2)))
|Ep| = (15 / 67.5) / (-$0.50 / $4.75)
|Ep| = 0.222
Therefore, the absolute price elasticity of demand for coffee in this scenario is 0.222.
Interpreting the Result
The result of 0.222 indicates that the demand for coffee is relatively inelastic. This means that the change in price from $5 to $4.50 had a relatively small effect on the quantity demanded of coffee. This is because the absolute value of the price elasticity of demand is less than 1.
In other words, a 10% decrease in price led to only a 12.5% increase in quantity demanded (15 / 60 = 0.25, or 25%). If the price had decreased by a larger percentage, the increase in quantity demanded would have been even greater.
Overall, this information can be useful for coffee producers and sellers to understand how changes in price affect the demand for their product.
Community Answer
If Price of Coffee decreases from 5 tot 4.50, and as a result the Cons...
If Price of Coffee decreases from 5 to 4.50, and as a result the Consumer's Demand for Coffee increase
from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -
(a) 1.5 (b) 3.0
(c) 2.0 (d) 2
from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -
(a) 1.5 (b) 3.0
(c) 2.0 (d) 2
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -?
Question Description
If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? 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 If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -?.
If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? 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 If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -?.
Solutions for If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? defined & explained in the simplest way possible. Besides giving the explanation of
If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -?, a detailed solution for If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? has been provided alongside types of If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? theory, EduRev gives you an
ample number of questions to practice If Price of Coffee decreases from 5 tot 4.50, and as a result the Consumer's Demand for Coffee increase from 60 grams to 75 grams, the absolute Price Elasticity of Demand of Coffee is -? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup