Question

Explain price elasticity of demand.

Solution

Price elasticity of demand (e_D) is a measure of the degree of responsiveness of quantity demanded of a good to change in its price, e_D is measured by the formula :

eD space equals space fraction numerator % space change space in space quantity space demanded over denominator % space change space in space price end fraction or space eD equals fraction numerator increment straight q over denominator increment straight p end fraction cross times straight p over straight q

Some More Questions From Theory Of Consumer Behaviour Chapter

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Theory Of Consumer Behaviour

Explain price elasticity of demand.

Some More Questions From Theory Of Consumer Behaviour Chapter

What are two approaches to attain the state of consumer's equilibrium?

Define indifference curve.

What is meant by marginal rate of substitution (MRS)?

Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

Give meaning of demand.

Name two determinants of demand.

List the factors that cause changes in demand.

What is law of demand?

What is demand schedule?

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