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When price of a commodity A falls from Rs.10 to Rs.5 per unit, its quantity demanded doubles. calculate its elasticity od demand and at what price will its QD fall by 50%?
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When price of a commodity A falls from Rs.10 to Rs.5 per unit, its qua...
Law of demand states: As price of a good increases, the quantity demanded of the good falls, and as the price of a good decreases, the quantity demanded of the good rises. There is an inverse relationship between price (P) and quantity demanded (Qd).Ed = 100/50= 2To get 50% FALL in QD there will be change in price (RISE) of Commodity A2 = 50/∆p∆p= 50/2 = 25%Change in price 10×25%i.e. Rs 2•5.so, it's 10+2.5= 12.5
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When price of a commodity A falls from Rs.10 to Rs.5 per unit, its qua...
Calculation of Elasticity of Demand

The formula for calculating the elasticity of demand is as follows:

Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price

Using the given information, we can calculate the elasticity of demand for commodity A as follows:

Percentage Change in Quantity Demanded = ((2 x Q1) - Q1) / Q1 = 1

Percentage Change in Price = (P1 - P2) / P1 = (10 - 5) / 10 = 0.5

Elasticity of Demand = 1 / 0.5 = 2

Therefore, the elasticity of demand for commodity A is 2.

Determining the Price at Which Quantity Demanded will Fall by 50%

To determine the price at which the quantity demanded will fall by 50%, we can use the following formula:

Percentage Change in Quantity Demanded = (Q1 - Q2) / ((Q1 + Q2) / 2) x 100

Where Q1 is the initial quantity demanded and Q2 is the new quantity demanded.

Using the given information, we know that the quantity demanded doubles when the price falls from Rs. 10 to Rs. 5 per unit. Therefore, Q1 = 1 and Q2 = 2.

Percentage Change in Quantity Demanded = (1 - 0.5) / ((1 + 0.5) / 2) x 100 = 33.33%

To calculate the new price at which the quantity demanded will fall by 50%, we can use the following formula:

Percentage Change in Price = (P1 - P2) / ((P1 + P2) / 2) x 100 = -50%

Where P1 is the initial price and P2 is the new price.

Solving for P2, we get:

-50% = (10 - P2) / ((10 + P2) / 2) x 100

-50% = (20 - 2P2) / (10 + P2)

-5P2 - 100 = 20 - 2P2

-3P2 = 40

P2 = Rs. 13.33

Therefore, the price at which the quantity demanded will fall by 50% is Rs. 13.33 per unit.
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When price of a commodity A falls from Rs.10 to Rs.5 per unit, its quantity demanded doubles. calculate its elasticity od demand and at what price will its QD fall by 50%?
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When price of a commodity A falls from Rs.10 to Rs.5 per unit, its quantity demanded doubles. calculate its elasticity od demand and at what price will its QD fall by 50%? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about When price of a commodity A falls from Rs.10 to Rs.5 per unit, its quantity demanded doubles. calculate its elasticity od demand and at what price will its QD fall by 50%? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When price of a commodity A falls from Rs.10 to Rs.5 per unit, its quantity demanded doubles. calculate its elasticity od demand and at what price will its QD fall by 50%?.
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