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mithileshs66... , asked a question
Subject: Economics , asked on 19/6/11

price elasticity of demand of  good is  (-1).the consumer buys 50 units of that good when price is Rs. 2 per unit. how many units will the consumer buy if the price rises to Rs.4 per unit? answer this with the help of total expenditure method of determining price elasticity of demand?

hi mithilesh.. wel here is the answer to your question..

lez make a table with the help of the given information..where price is (cost of one unit multiplied by total commodity)..quantity is measured in terms of units..and let the quantity purchased after the price rises be denoted as "x" ..and lastly total expenditure is ( P * Q ) ..



  100  50  5000

  200  x  200x


now.. ep  =  TE before the price rises /  TE after the price rises ..

-> -1 = 5000 / 200x 

-> - 200x = 5000

-> - x = 25

-> squaring both sides ...we get ... x = 25 ..!!!!

hope u got ur answer..!!!! cheers!

keep smiling!!! :))) 

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