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Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change?
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Price elasticity of demand of a good is 1.when it's price per unit fal...
As per the question given eD=1
Q=16, Q1=18 and price per unit falls i.e change in price =1... Now we hve to find Price before change (P) =?
So lets solve this step by step at frst we hve to find change in quantity as both Q and Q1 are given so jst apply the formula of Change in quantity=Q1-Q =18-16=2..now as we hve to find P for that we dont hve the value of P1 bt given the value of Change in price.. Nd as per the formula of eD we also hve the value of eD so put the values in the formula in the second step i.e eD=change in quantity/change in price * price /quantity
1=2/-1 * P/16
2P=16..P=(-) 8
Hence the answer of price before change is - 8..
**Note in the value of Change in price negative sign is there because the price is falling
Q=16, Q1=18 and price per unit falls i.e change in price =1... Now we hve to find Price before change (P) =?
So lets solve this step by step at frst we hve to find change in quantity as both Q and Q1 are given so jst apply the formula of Change in quantity=Q1-Q =18-16=2..now as we hve to find P for that we dont hve the value of P1 bt given the value of Change in price.. Nd as per the formula of eD we also hve the value of eD so put the values in the formula in the second step i.e eD=change in quantity/change in price * price /quantity
1=2/-1 * P/16
2P=16..P=(-) 8
Hence the answer of price before change is - 8..
**Note in the value of Change in price negative sign is there because the price is falling
Community Answer
Price elasticity of demand of a good is 1.when it's price per unit fal...
Calculation of Price before Change
Given, price elasticity of demand = 1, initial demand = 16 units, and final demand = 18 units.
Price elasticity of demand is the measure of the responsiveness of the quantity demanded of a good to a change in its price. A value of 1 for price elasticity of demand means that the quantity demanded of the good changes by the same percentage as the change in its price.
Let us assume that the initial price of the good is P. So, we can calculate the percentage change in price as:
Percentage change in price = (1 / P) * 1 = 1 / P
Similarly, we can calculate the percentage change in quantity demanded as:
Percentage change in quantity demanded = (18 - 16) / ((16 + 18) / 2) = 0.125 or 12.5%
Using the formula for price elasticity of demand, we know that:
Price elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in price)
Substituting the values in the above formula, we get:
1 = 0.125 / (1 / P)
Solving for P, we get:
P = 10
Explanation
The above calculation shows that the initial price of the good was 10 rupees before the change. When the price of the good falls by 1 rupee, the demand for the good rises from 16 to 18 units. This means that the percentage change in quantity demanded is 12.5%, which is equal to the percentage change in price. Hence, the price elasticity of demand is 1.
The calculation of price elasticity of demand is important for businesses to determine the optimal price for their products. If the price elasticity of demand is greater than 1, then a decrease in price will lead to a more than proportionate increase in quantity demanded, which means that the business can increase its revenue by lowering the price. On the other hand, if the price elasticity of demand is less than 1, then a decrease in price will lead to a less than proportionate increase in quantity demanded, which means that the business should keep its price high to maximize revenue.
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Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change?
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Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change? for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change? covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change?.
Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change? for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change? covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Price elasticity of demand of a good is 1.when it's price per unit falls by 1 rupees then it's demand rises from 16-18 units.calculate the price before change?.
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