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Theory Of Consumer Behaviour
Question
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Price of a good falls from र 10 to र 8. As a result its demand rises from 80 units to 100 units. What can you say about price elasticity of demand by total expenditure method?

Answer

Price (र)

10

 

Demand (units)

80

100

Total expenditure (र)

800

800

It is a case of unit elastic demand because total expenditure before and after the change in price is the same, i.e., र 800.

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Some More Questions From Theory Of Consumer Behaviour Chapter

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Distinguish between 'Change in demand' and 'Change in quantity demanded of a commodity'. 

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