12th Class Economics Solved Paper - Economics 2012 Outside Delhi Set-II

  • question_answer A consumer buys 14 units of a good at a price of Rs. 8 per unit. At price Rs. 7 per unit he spends Rs. 98 on the good. Calculate price elasticity of demand by the percentage method. Comment upon the shape of demand curve based on this information.

    Answer:

    Price (Rs.) Q (Units) Total Expenditure (Rs.)
    8 14 112
    7 14 98
    P = 8, \[{{P}_{1}}\]= 7, = 14, \[{{Q}_{1}}\]= 14
    \[\Delta P~=78=1,\,\,\,\,\Delta Q=1414=0\]
    \[{{E}_{d}}=\frac{\Delta Q}{\Delta P}\,\,\times \,\,\frac{P}{Q}=\frac{0}{-1}\,\,\times \,\,\frac{8}{14}=0\]
    Therefore, the shape of demand curve will be perfectly inelastic.


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