Explain price elasticity of demand.

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(a)

Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity?

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Consider the demand curve D(P) = 10 - 3p. What is the elasticity at price 5/3?

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Suppose the price elasticity of demand for a good is -0.2. If there is a 5% increase in the price of the good, by what percentage will the demand for the good go down?

3

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The demand for a goods falls to 500 units in response to rise in price by Rs 10. If the original demand was 600 units at the price of Rs 30, calculate price elasticity of demand.

3

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A consumer spends Rs 80 on a commodity when price is Rs 1 per unit. If the price increases by Rs 1, his expenditure becomes Rs 96. Comment on PED.

3

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A decline in the price of good X by Rs 5 causes an increase in its demand by 20 units to 50 units. The new price is Rs 15. Calculate elasticity of demand.

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A consumer buys 80 units of a good at a price of Rs 5 per unit. Suppose, the price elasticity of demand is (-) 2. At what price will he buy 64 units?

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The demand for a good at Rs10 per unit is 40 units. Price falls by Rs 5. If price elasticity of demand is (-) 3, calculate the new quantity demanded.

3

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Price elasticity of demand for a product is 'unity'. A household buys 25 units of this product at the price of RS 5 per unit. If the price of product rises by Rs 1, how much quantity of the product will the household buy?

3

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As a result of increase in price from 4 to 5, the quantity demanded decreases by 20%. Comment on PED.

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When price of a commodity falls by 20%, the quantity demanded of it increases by 80%. Find out its price elasticity of demand.

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The demand for a good rises by 20 percent as a result· of fall in its price. Its price elasticity of demand is (-)0.8. Calculate the percentage fall in price.

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

3

(a)

Calculate the price elasticity of demand for a commodity when its price increases by 25% and quantity demanded falls from 150 units to 120 units.

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