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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?
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What is the original price of a commodity when price elasticity is 0.7...
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What is the original price of a commodity when price elasticity is 0.7...
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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What is the original price of a commodity when price elasticity is 0.7...
Calculation of Original Price:
Given,
Price Elasticity = 0.71
Initial Demand = 20 units
New Demand = 15 units
New Price = Rs. 10
Formula:
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
0.71 = ((20 - 15) / 20) / ((P - 10) / P)
0.71 = (5 / 20) / ((P - 10) / P)
0.71 = (1 / 4) * (P / (P - 10))
P / (P - 10) = 0.71 * 4
P / (P - 10) = 2.84
P = 2.84 * (P - 10)
P = 2.84P - 28.4
P - 2.84P = -28.4
-1.84P = -28.4
P = -28.4 / -1.84
P = Rs. 15.4
Therefore, the original price of the commodity is Rs. 15.4.
Given,
Price Elasticity = 0.71
Initial Demand = 20 units
New Demand = 15 units
New Price = Rs. 10
Formula:
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
0.71 = ((20 - 15) / 20) / ((P - 10) / P)
0.71 = (5 / 20) / ((P - 10) / P)
0.71 = (1 / 4) * (P / (P - 10))
P / (P - 10) = 0.71 * 4
P / (P - 10) = 2.84
P = 2.84 * (P - 10)
P = 2.84P - 28.4
P - 2.84P = -28.4
-1.84P = -28.4
P = -28.4 / -1.84
P = Rs. 15.4
Therefore, the original price of the commodity is Rs. 15.4.
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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. 15.4b)Rs. 18c)Rs. 20d)Rs. 8Correct answer is option 'A'. Can you explain this answer?
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