Q7 of 10 Page 1

The coefficient of price elasticity of demand is given as (–) 3. At a price of

Rs. 10, a consumer buys 100 units of the commodity. How many units of


the commodity will she buy if the price falls by 50 %?


Price elasticity of demand is -3


Price is Rs 10


Quantity is 100 units


Change in price is 50%


Ed = P/Q *Change in Q/Change in P


-3 = 10/100 * Change in Q / 50


-3 = Change in Q/500


Change in Q = 500*3 = 1500


More from this chapter

All 10 →
22

The saving function of an economy is given as :

S = (–) 10 + 0 �20 Y.


If the ex-ante investments are Rs. 240 crores, calculate the following :


(i) The equilibrium level of income in the economy.


(ii) Additional investments will be needed to double the


present level of equilibrium income.


 5

Explain the concepts of individual demand schedule and market demand

schedule.


 10

(a) ‘‘A firm under perfect competition is a price taker whereas under

monopoly is a price maker.’’ Defend or refute the statement with


valid reasons.


(b) What is meant by selling cost?


 21

(a) Explain how using ‘‘Bank Rate’’ the Central Bank can regulate money supply in an economy.

(b) What is meant by ‘Repo Rate’?