Class 11 Exam > Class 11 Questions > When price of curd falls from Rs.8 to Rs.7, i...
Start Learning for Free
When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic?
Most Upvoted Answer
When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 u...
Determination of Elasticity of Demand
Introduction:
The elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a change in its price. In this case, we will determine the elasticity of demand for curd based on the given information.
Calculation of Percentage Change in Price and Quantity:
To calculate the percentage change in price and quantity, we will use the following formula:
Percentage Change = ((New Value - Old Value) / Old Value) * 100
Given:
Initial price (P1) = Rs. 8
Final price (P2) = Rs. 7
Initial quantity demanded (Q1) = 12 units
Final quantity demanded (Q2) = 16 units
Percentage Change in Price = ((7 - 8) / 8) * 100 = -12.5%
Percentage Change in Quantity = ((16 - 12) / 12) * 100 = 33.33%
Determining the Elasticity of Demand:
To determine the elasticity of demand, we compare the percentage change in quantity demanded to the percentage change in price. There are three possibilities:
1. Elastic Demand:
If the percentage change in quantity demanded is greater than the percentage change in price (|%ΔQ| > |%ΔP|), the demand is considered elastic. This means that the quantity demanded is highly responsive to changes in price, and consumers are price-sensitive.
2. Inelastic Demand:
If the percentage change in quantity demanded is less than the percentage change in price (|%ΔQ| < |%δp|),="" the="" demand="" is="" considered="" inelastic.="" this="" means="" that="" the="" quantity="" demanded="" is="" not="" very="" responsive="" to="" changes="" in="" price,="" and="" consumers="" are="" less="" />
3. Unitary Elastic Demand:
If the percentage change in quantity demanded is equal to the percentage change in price (|%ΔQ| = |%ΔP|), the demand is considered unitary elastic. This means that the quantity demanded changes proportionally with changes in price.
Calculation:
|%-12.5%| > |3.33%|
Conclusion:
Based on the calculation, we can conclude that the demand for curd is elastic. The percentage change in quantity demanded (33.33%) is greater than the percentage change in price (12.5%), indicating that consumers are highly responsive to changes in price. As a result, the expenditure on curd will decrease as the price falls, leading to an increase in quantity demanded.
Introduction:
The elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a change in its price. In this case, we will determine the elasticity of demand for curd based on the given information.
Calculation of Percentage Change in Price and Quantity:
To calculate the percentage change in price and quantity, we will use the following formula:
Percentage Change = ((New Value - Old Value) / Old Value) * 100
Given:
Initial price (P1) = Rs. 8
Final price (P2) = Rs. 7
Initial quantity demanded (Q1) = 12 units
Final quantity demanded (Q2) = 16 units
Percentage Change in Price = ((7 - 8) / 8) * 100 = -12.5%
Percentage Change in Quantity = ((16 - 12) / 12) * 100 = 33.33%
Determining the Elasticity of Demand:
To determine the elasticity of demand, we compare the percentage change in quantity demanded to the percentage change in price. There are three possibilities:
1. Elastic Demand:
If the percentage change in quantity demanded is greater than the percentage change in price (|%ΔQ| > |%ΔP|), the demand is considered elastic. This means that the quantity demanded is highly responsive to changes in price, and consumers are price-sensitive.
2. Inelastic Demand:
If the percentage change in quantity demanded is less than the percentage change in price (|%ΔQ| < |%δp|),="" the="" demand="" is="" considered="" inelastic.="" this="" means="" that="" the="" quantity="" demanded="" is="" not="" very="" responsive="" to="" changes="" in="" price,="" and="" consumers="" are="" less="" />
3. Unitary Elastic Demand:
If the percentage change in quantity demanded is equal to the percentage change in price (|%ΔQ| = |%ΔP|), the demand is considered unitary elastic. This means that the quantity demanded changes proportionally with changes in price.
Calculation:
|%-12.5%| > |3.33%|
Conclusion:
Based on the calculation, we can conclude that the demand for curd is elastic. The percentage change in quantity demanded (33.33%) is greater than the percentage change in price (12.5%), indicating that consumers are highly responsive to changes in price. As a result, the expenditure on curd will decrease as the price falls, leading to an increase in quantity demanded.
Attention Class 11 Students!
To make sure you are not studying endlessly, EduRev has designed Class 11 study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Class 11.
|
Explore Courses for Class 11 exam
|
|
Top Courses for Class 11View all
When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic?
Question Description
When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? 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 When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic?.
When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? 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 When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic?.
Solutions for When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? in English & in Hindi are available as part of our courses for Class 11.
Download more important topics, notes, lectures and mock test series for Class 11 Exam by signing up for free.
Here you can find the meaning of When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? defined & explained in the simplest way possible. Besides giving the explanation of
When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic?, a detailed solution for When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? has been provided alongside types of When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? theory, EduRev gives you an
ample number of questions to practice When price of curd falls from Rs.8 to Rs.7, its demand rises from 12 units to 16 units, compare the expenditure on the goods and determine whether demand is elastic or inelastic? tests, examples and also practice Class 11 tests.
|
|
Explore Courses for Class 11 exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup