Question

The quantity demanded of a commodity at price 8 per unit is 600 units. Its price falls by 25% and quantity demanded rises by 120 units. Calculate e_D. Is its demand elastic? Give reasons for your answer.

Solution

Percent rise in quantity demanded
$equals space 120 over 600 cross times 100 equals 20 % eD space equals space fraction numerator % space Change space in space demand over denominator % space Change space in space price end fraction equals space 20 over 25 equals 0.8$
Demand is not elastic because elasticity is less than unity (i.e. 1).

Some More Questions From Theory Of Consumer Behaviour Chapter

Give meaning of demand.

Name two determinants of demand.

List the factors that cause changes in demand.

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Theory Of Consumer Behaviour

The quantity demanded of a commodity at price 8 per unit is 600 units. Its price falls by 25% and quantity demanded rises by 120 units. Calculate e_D. Is its demand elastic? Give reasons for your answer.

Some More Questions From Theory Of Consumer Behaviour Chapter

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?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

What is meant by one good being substitute of other?

What is meant by one good being complementary to another.

Give an example of a pair of commodities that are substitutes of each other.

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NCERT Sample Papers

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For Daily Free Study Material Join wiredfaculty

Theory Of Consumer Behaviour

The quantity demanded of a commodity at price 8 per unit is 600 units. Its price falls by 25% and quantity demanded rises by 120 units. Calculate eD. Is its demand elastic? Give reasons for your answer.

Some More Questions From Theory Of Consumer Behaviour Chapter

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?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

What is meant by one good being substitute of other?

What is meant by one good being complementary to another.

Give an example of a pair of commodities that are substitutes of each other.

Mock Test Series

NCERT Sample Papers

Entrance Exams Preparation

The quantity demanded of a commodity at price 8 per unit is 600 units. Its price falls by 25% and quantity demanded rises by 120 units. Calculate e_D. Is its demand elastic? Give reasons for your answer.