What is the original price of a commodity when price elasticity is 0.71 and demand changes from 20 units to 15 units and the new price is Rs. 10?
  • a)
    Rs. 15.4
  • b)
    Rs. 18
  • c)
    Rs. 20
  • d)
    Rs. 8
Correct answer is option 'A'. Can you explain this answer?

CA Foundation Question

3 Answers
Yashi Jain answered Jun 05, 2018
Assume original price as 'X' Ep = % ∆D÷ %∆P 0.71= 20-15 /20 ÷ X-10/X 0.71= 5/20 ÷ X-10/X 0.71= (1/4) × (X/X-10) 0.71 = X÷ (4X-40) X = 0.71× (4X-40) X = 2.84X - 28.4 X - 2.84X = -28.4 -1.84X = -28.4 X = -28.4/ -1.84 X = 15.4

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