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Can you explain the answer of this question below:
The Price of a tiffin box is Rs. 100 per unit andthe quantity demanded in a market is 1,25,000units . Company increased the price to Rs.125per unit due to this increase in price quantitydemanded decreases to 1,00,000 units. whatwill be price elasticity of demand ______
A:1.25
B:1.00
C:0.80
D:None of the above.
The answer is c.
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Can you explain the answer of this question below:... moreThe Price of...
Well lets solve this step by step..... Given:- Q=125000 units, Q1=100000 units, change in quantity= - 25000 units, now %change in quantity demand = change in quantity /Q * 100= - 20% .. Now P=Rs 100, P1=Rs 125, change in price=Rs 25, %change in price = change in price/P * 100= 25%... nw price elasticity of demand = %change in quantity demanded /%change in price =-20%/25%=(-)0.8... i think 0.8 will be the answer plz check it once more...
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Can you explain the answer of this question below:... moreThe Price of...
Price elasticity of demand measures the responsiveness of quantity demanded due to a change in price. Mathematically, it is defined as the percentage change in quantity demanded divided by the percentage change in price.
In this case, the initial price of a tiffin box is Rs. 100 per unit and the quantity demanded is 1,25,000 units. When the company increases the price to Rs. 125 per unit, the quantity demanded decreases to 1,00,000 units.
Using the formula, we can calculate the price elasticity of demand as follows:
% change in quantity demanded = ((1,00,000 - 1,25,000)/1,25,000) x 100% = -20%
% change in price = ((125 - 100)/100) x 100% = 25%
Price elasticity of demand = (-20%/25%) = -0.8
However, the question asks for the absolute value of price elasticity of demand, which is always positive. Therefore, the price elasticity of demand in this case is 0.8 or 0.80 (option C).
To summarize:
- Price elasticity of demand measures the responsiveness of quantity demanded due to a change in price.
- It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
- In this case, the price elasticity of demand is 0.80, indicating that the demand for tiffin boxes is relatively inelastic, meaning that customers are not very responsive to price changes.
In this case, the initial price of a tiffin box is Rs. 100 per unit and the quantity demanded is 1,25,000 units. When the company increases the price to Rs. 125 per unit, the quantity demanded decreases to 1,00,000 units.
Using the formula, we can calculate the price elasticity of demand as follows:
% change in quantity demanded = ((1,00,000 - 1,25,000)/1,25,000) x 100% = -20%
% change in price = ((125 - 100)/100) x 100% = 25%
Price elasticity of demand = (-20%/25%) = -0.8
However, the question asks for the absolute value of price elasticity of demand, which is always positive. Therefore, the price elasticity of demand in this case is 0.8 or 0.80 (option C).
To summarize:
- Price elasticity of demand measures the responsiveness of quantity demanded due to a change in price.
- It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
- In this case, the price elasticity of demand is 0.80, indicating that the demand for tiffin boxes is relatively inelastic, meaning that customers are not very responsive to price changes.
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Can you explain the answer of this question below:... moreThe Price of a tiffin box is Rs. 100 per unit andthe quantity demanded in a market is 1,25,000units . Company increased the price to Rs.125per unit due to this increase in price quantitydemanded decreases to 1,00,000 units. whatwill be price elasticity of demand ______A:1.25B:1.00C:0.80D:None of the above.The answer is c.
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