When the price rises from Rs 50 to Rs 60, quantity demanded falls from 500 to 400 units. What is the price elasticity of demand (in absolute value)?
Answer and explanation
Correct answer: C. 1
- Step 1: Percentage change in price = 20% and in quantity = -20%.
- Step 2: Elasticity = 20 / 20 = 1.
Answer
1.
Practise more Business Economics.
Free questions with an explanation for every one, and full timed CA Foundation mock tests.
More Business Economics questions
- If the price elasticity of demand is greater than one, demand is
- A budget in which expenditure exceeds receipts is a
- Which of these is a determinant of the demand for a good, other than its price?
- At the equilibrium price in a market,
- A rise in the price of a good leads to a fall in the quantity demanded, other things equal. This is the
- Which of these is a fixed cost for a factory in the short run?