A person spends rs.250 on a good when price is rs.5.When price rises to rs.6,he spends rs.240.Find Ed by %method.
Dear Student ,
Here is the answer:
In this question spending( expenditure ) is given , so we have to calculate the quantity demanded by the formula :
expenditure= price* quanity
And Q1 and P1 Are the initial quantity demanded and price and Q2 and P2 are after quantity demanded and price of the good.
negative sign comes before elasticity of good due to the negative relationship between price and quantity demanded .
Hope this information will clear your doubts about this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards
Here is the answer:
In this question spending( expenditure ) is given , so we have to calculate the quantity demanded by the formula :
expenditure= price* quanity
And Q1 and P1 Are the initial quantity demanded and price and Q2 and P2 are after quantity demanded and price of the good.
negative sign comes before elasticity of good due to the negative relationship between price and quantity demanded .
Hope this information will clear your doubts about this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards