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Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:
- a)0.25
- b)0.50
- c)1.00
- d)1.50
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Original price of a commodity is Rs. 500 and quantity demanded of that...
Heading: Calculation of Price Elasticity of Demand
To calculate the price elasticity of demand, we use the following formula:
Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price)
Heading: Calculation of % Change in Quantity Demanded
The % change in quantity demanded can be calculated as follows:
% Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded)/Old Quantity Demanded) x 100
% Change in Quantity Demanded = ((15-20)/20) x 100
% Change in Quantity Demanded = -25%
Heading: Calculation of % Change in Price
The % change in price can be calculated as follows:
% Change in Price = ((New Price - Old Price)/Old Price) x 100
% Change in Price = ((750-500)/500) x 100
% Change in Price = 50%
Heading: Calculation of Price Elasticity of Demand
Using the formula for price elasticity of demand and the % changes calculated above, we get:
Price Elasticity of Demand = (-25%)/(50%)
Price Elasticity of Demand = -0.5
Since price elasticity of demand is usually expressed as an absolute value, we take the absolute value of -0.5 which gives us 0.5.
Therefore, the price elasticity of demand in this case is 0.5 or 0.50 (option B). This means that the demand for the commodity is relatively inelastic as the % change in quantity demanded is less than the % change in price.
To calculate the price elasticity of demand, we use the following formula:
Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price)
Heading: Calculation of % Change in Quantity Demanded
The % change in quantity demanded can be calculated as follows:
% Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded)/Old Quantity Demanded) x 100
% Change in Quantity Demanded = ((15-20)/20) x 100
% Change in Quantity Demanded = -25%
Heading: Calculation of % Change in Price
The % change in price can be calculated as follows:
% Change in Price = ((New Price - Old Price)/Old Price) x 100
% Change in Price = ((750-500)/500) x 100
% Change in Price = 50%
Heading: Calculation of Price Elasticity of Demand
Using the formula for price elasticity of demand and the % changes calculated above, we get:
Price Elasticity of Demand = (-25%)/(50%)
Price Elasticity of Demand = -0.5
Since price elasticity of demand is usually expressed as an absolute value, we take the absolute value of -0.5 which gives us 0.5.
Therefore, the price elasticity of demand in this case is 0.5 or 0.50 (option B). This means that the demand for the commodity is relatively inelastic as the % change in quantity demanded is less than the % change in price.
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Original price of a commodity is Rs. 500 and quantity demanded of that...
Ed=-P/Q × Q1-Q/P1 -P ( Ed =elasticity of demand P=initial price P1= New price Q=initial quantity Q1 =new quantity) here P= 500 P1=750 Q=20 Q1=15 - 500/20 × -5/250 = 0.5
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Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer?
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Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer?.
Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer?.
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Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:a)0.25b)0.50c)1.00d)1.50Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
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