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Quantity supplied of a product at Rs. 8 per unit is 200 Units. If the price elasticity of supply is 1.5, what will be the quantity supplied at Rs. 10 per unit?
a. 150
b. 175
c. 250
d. 275
Ans - d
Solution :
Price Elasticity of Supply = (% change in quantity supplied. / (% change in price)
1.5 = ((x-200)*100/200)/((10-8)*100/8)
1.5 = ((x-200)/2)/(200/8)
1.5 = ((x-200)/2)/25
1.5 = (x-200)/50
75 = x-200
x = 75+200
x = 275
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Demand for a product at Rs. 4 per unit is 50. If the price elasticity of demand is 2, how much the demand will be at Rs. 3 per unit?
a. 25
b. 40
c. 60
d. 75
Ans - d
Solution :
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
% Change in Quantity Demanded = x-50/50*100 = (x-50)*2 = 2x-100
% Change in Price = 1/4*100 = 25
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
2 = 2x-100/25
50 = 2x-100
50+100 = 2x
2x = 150
x = 150/2 = 75
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At Rs. 30 demand for sugar is 500 Kg. When the price falls to Rs. 24, the demand increases to 600 Kg. The price elasticity of demand of sugar is ......
a. 2
b. 2.5
c. 3
d. 3.5
Ans - c
Solution :
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
% Change in Quantity Demanded = 100/500*100 = 20
% Change in Price = 6/30*100 = 20
Price Elasticity of Demand = 20/20 = 1
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