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Theory Of Consumer Behaviour
Question
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When price of a good rises from र 7 to र 8 per unit, its demand falls from 30 units to 20 units. Compare expenditure on the good to determine whether demand is elastic or inelastic.

Answer

Solution not provided.

Tips: -

Hint. Total expenditure before price change = 30 × 7 = 210
Total expenditure after price change = 20 × 8 = 160
Since rise in price reduces total expenditure, therefore, eD is more than 1.

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