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A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y?
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A 10 % fall in the price of goods x leads to a 20% rise in the demand ...
Price Elasticity of Demand for Good X:
To calculate the price elasticity of demand for good X, we need to use the formula:
Price Elasticity of Demand = % change in quantity demanded / % change in price
Given that a 10% fall in the price of good X leads to a 20% rise in the demand for good X, we can calculate the % change in quantity demanded and % change in price as follows:
% change in quantity demanded = 20%
% change in price = -10% (negative sign indicates a fall in price)
Using the formula, we can calculate the price elasticity of demand for good X:
Price Elasticity of Demand for good X = 20% / -10% = -2
The price elasticity of demand for good X is -2, indicating that the demand for good X is relatively elastic. This means that a 1% decrease in price will result in a 2% increase in quantity demanded for good X.
Price Elasticity of Demand for Good Y:
To calculate the price elasticity of demand for good Y, we again use the formula:
Price Elasticity of Demand = % change in quantity demanded / % change in price
Given that a 4% rise in the price of good Y leads to a 12% fall in the demand for good Y, we can calculate the % change in quantity demanded and % change in price as follows:
% change in quantity demanded = -12% (negative sign indicates a fall in demand)
% change in price = 4%
Using the formula, we can calculate the price elasticity of demand for good Y:
Price Elasticity of Demand for good Y = -12% / 4% = -3
The price elasticity of demand for good Y is -3, indicating that the demand for good Y is relatively elastic. This means that a 1% increase in price will result in a 3% decrease in quantity demanded for good Y.
Summary:
- The price elasticity of demand for good X is -2, indicating that the demand for good X is relatively elastic. A 1% decrease in price will result in a 2% increase in quantity demanded for good X.
- The price elasticity of demand for good Y is -3, indicating that the demand for good Y is relatively elastic. A 1% increase in price will result in a 3% decrease in quantity demanded for good Y.
Both goods have relatively elastic demand, meaning that changes in price have a significant impact on the quantity demanded.
To calculate the price elasticity of demand for good X, we need to use the formula:
Price Elasticity of Demand = % change in quantity demanded / % change in price
Given that a 10% fall in the price of good X leads to a 20% rise in the demand for good X, we can calculate the % change in quantity demanded and % change in price as follows:
% change in quantity demanded = 20%
% change in price = -10% (negative sign indicates a fall in price)
Using the formula, we can calculate the price elasticity of demand for good X:
Price Elasticity of Demand for good X = 20% / -10% = -2
The price elasticity of demand for good X is -2, indicating that the demand for good X is relatively elastic. This means that a 1% decrease in price will result in a 2% increase in quantity demanded for good X.
Price Elasticity of Demand for Good Y:
To calculate the price elasticity of demand for good Y, we again use the formula:
Price Elasticity of Demand = % change in quantity demanded / % change in price
Given that a 4% rise in the price of good Y leads to a 12% fall in the demand for good Y, we can calculate the % change in quantity demanded and % change in price as follows:
% change in quantity demanded = -12% (negative sign indicates a fall in demand)
% change in price = 4%
Using the formula, we can calculate the price elasticity of demand for good Y:
Price Elasticity of Demand for good Y = -12% / 4% = -3
The price elasticity of demand for good Y is -3, indicating that the demand for good Y is relatively elastic. This means that a 1% increase in price will result in a 3% decrease in quantity demanded for good Y.
Summary:
- The price elasticity of demand for good X is -2, indicating that the demand for good X is relatively elastic. A 1% decrease in price will result in a 2% increase in quantity demanded for good X.
- The price elasticity of demand for good Y is -3, indicating that the demand for good Y is relatively elastic. A 1% increase in price will result in a 3% decrease in quantity demanded for good Y.
Both goods have relatively elastic demand, meaning that changes in price have a significant impact on the quantity demanded.
Community Answer
A 10 % fall in the price of goods x leads to a 20% rise in the demand ...
X=50
Y=116.67
Y=116.67
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A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y?
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A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y?.
A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A 10 % fall in the price of goods x leads to a 20% rise in the demand for good x. A 4%rise in the price of good y leads to a 12% fall in the demand of good y calculate the price elasticity of demand of x and y?.
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