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Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?
- a)1.25
- b)1.00
- c)0.80
- d)None of the above.
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in m...
Correct Answer :- C
Explanation : Q1 = 100 P1 = 125000
Q2 = 125 P2 = 100000
(Q2-Q1)/Q = P(P2-P1)
=> (25000/125000) * (100/25)
= 4/5
= 0.8
Most Upvoted Answer
Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in m...
Price Elasticity of Demand (PED) is a measure of the responsiveness of quantity demanded to a change in price of the product. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
Given data:
Initial price (P1) = Rs. 100
Initial quantity demanded (Q1) = 1,25,000 units
New price (P2) = Rs. 125
New quantity demanded (Q2) = 1,00,000 units
Calculation:
Change in price = P2 - P1 = 125 - 100 = Rs. 25
Percentage change in price = (Change in price / P1) x 100 = (25 / 100) x 100 = 25%
Change in quantity demanded = Q2 - Q1 = 1,00,000 - 1,25,000 = -25,000 (negative sign indicates decrease)
Percentage change in quantity demanded = (Change in quantity demanded / Q1) x 100 = (-25,000 / 1,25,000) x 100 = -20%
Price Elasticity of Demand = (Percentage change in quantity demanded / Percentage change in price)
PED = (-20% / 25%) = -0.8 (negative sign indicates inverse relationship between price and quantity demanded)
Since the PED value obtained is negative, we take the absolute value to get a positive value. Therefore, the price elasticity of demand for this product is 0.8.
Answer: Option C) 0.80.
Given data:
Initial price (P1) = Rs. 100
Initial quantity demanded (Q1) = 1,25,000 units
New price (P2) = Rs. 125
New quantity demanded (Q2) = 1,00,000 units
Calculation:
Change in price = P2 - P1 = 125 - 100 = Rs. 25
Percentage change in price = (Change in price / P1) x 100 = (25 / 100) x 100 = 25%
Change in quantity demanded = Q2 - Q1 = 1,00,000 - 1,25,000 = -25,000 (negative sign indicates decrease)
Percentage change in quantity demanded = (Change in quantity demanded / Q1) x 100 = (-25,000 / 1,25,000) x 100 = -20%
Price Elasticity of Demand = (Percentage change in quantity demanded / Percentage change in price)
PED = (-20% / 25%) = -0.8 (negative sign indicates inverse relationship between price and quantity demanded)
Since the PED value obtained is negative, we take the absolute value to get a positive value. Therefore, the price elasticity of demand for this product is 0.8.
Answer: Option C) 0.80.
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Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. Can you explain this answer?
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Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. 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 Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. 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 Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. Can you explain this answer?.
Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. 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 Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. 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 Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?a)1.25b)1.00c)0.80d)None of the above.Correct answer is option 'C'. Can you explain this answer?.
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