Question
Calculate the price elasticity of demand for the product
if an increase in its price from Rs.20 to Rs.22 leads to a decline in the quantity demanded from 100 units to 80 units.Solution
Given, Q1 = 100 Q2 = 80 P1 = 20 P2 = 22 Price Elasticity of Demand (PED) = % change in Quantity Demanded / % change in Price to Calculate: % change in Quantity Demanded = (Q2 – Q1) / Q1 = (80 -100) / 100 = -20% to Calculate: % change in Price = (P2 – P1) / P1 = (22 -20) / 20 = 10% to calculate Price elasticity: PED = -20% / 10% = -2 Please note: · The negative sign shows the inverse relationship between price and quantity demanded (Law of Demand). · The absolute value = 2, which is greater than 1, so demand is elastic.
In the question below, two statements (I) and (II) are given. These statements may be either independent causes or may be effects of independent cause...
Statement : "To reduce accidents, the traffic department has made it mandatory for two-wheeler riders to wear helmets."
Assumptions :
<...Statement: Farm fires, being touted as the major reason for unbreathable Delhi air, are shown to account for only 40% of the current spell of deadly ha...
Statement : "The company has decided to offer free home delivery of its products."
Assumptions :
I. Free home delivery may attract more ...
Event (A): The residents of Oorgaumpet in Kolar Gold Fields woke to see a 200-ft-deep sinkhole, which had formed overnight in their neighbourhood.
...STATEMENT : “If you are Information technology engineer, we want you as our web developer”- an advertisement by company A.
ASSUMPT...
The increased caseload and mortality due to the disease this year compared with last year could be because pre-existing immunity through exposure to the...
The process of document verification for CET in the state which is carried out in 16 offline centres, now needs to be migrated to an online mode.
Statement: "The education ministry has launched a nationwide program to distribute free tablets to students in government schools."
Assumptio...Statement:
In the last decade, online shopping has grown exponentially, with more people preferring to shop from the comfort of their homes. Th...
