Price elasticity of demand is .5 and tlie price decreases 12% then sales________

Question

Price elasticity of demand is .5 and tlie price decreases 12% then sales___________________% Price elasticity of supply is 1.5 and price decreases 10% then supply________________% Income elasticity is + 2.0 and income increases 5% then sales__________________% Income elasticity is .5 and income increases 5% then sales____________________% Income elasticity is minus.5 and income increases 10% then sales.__________________% Price elasticity of milk is minus.04 and milk prices increase 50% then milk sales__________________% The total revenue for milk__________________% The price elasticity for bread is minus.4 and bread prices decrease 5% then sales__________________% The total revenue for bread__________________% The elasticity of demand for automobiles is 2.0 and the price of cars increase by 4% then sales Which is less inelastic coca cola or soft drinks?

Explanation / Answer

4. Elasticity of demand = % change in demand / % change in price = 0.5

which means that 1% decrease in price causes 0.5% increase in the quantity demanded of a commodity.

So, when price decreases by 12% then quantitity demanded will increase by 6% so sales will increase by 6%.

5. Elasticity of supply = % change in supply / % change in price = 1.5

which means that when price increases by 1% then quantity supplied will increase by 1.5%.

So, when price decreases by 10% then quantity supplied will decrease by 15%.

6. Income elasticity shows change in quantity demanded due to change in the income of the consumer. It is given as 2 which means when income of consumer increases by 1% then demand of commodity increases by 2%.

So, when income of the consumer increases by 5% then demand of commodity increases by 10%. Increase in demand increase the sales of producers by 10%.

7.  Income elasticity is 0.5 which means increase in income of the consumer increases the demand of commodity. If income increases by 1% then demand of commodity increases by 0.5%.

So, when income of the consumer increase by 5% then demand of commodity increases by 2.5%. As a result, sale of commodity increases by 2.5%

8. Income elasticity is - 0.5 which means increase in income of the consumer decreases the demand of commodity. If income increases by 1% then demand of commodity decreases by 0.5%.

So, when income of the consumer increase by 10% then demand of commodity decreases by 5%. As a result, sale of commodity decreases by 5%.

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