Theory of demand

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Sriram Somayajula

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16-Jun-20 18:07

If pirce increases by 50% if demand also increases by 50% then price elasticity of demand is -1or1 explain

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Rupesh Virat

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16-Jun-20 18:58

When the percentage change in quantity demanded is equal to that in price, price elasticity of demand is unit (or unitary) elastic (Ed = â??1) .

Madhuri Veluri

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16-Jun-20 19:36

But price and demand increasing in same direction so we should take +1or -1

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Rupesh Virat

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17-Jun-20 12:00

When the price and the demand increase/decrease, in same proportion (say both increase/decrease by 10%), then the elasticity of demand will be +1. in different proportions (say both increase or decrease - demand by 10% and price by 4% or vice-versa), then the elasticity of demand will be positive.

Madhuri Veluri

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17-Jun-20 13:02

Please refer pages2.38, 2.40 and 2.41 of study material. Link below https://resource.cdn.icai.org/46695bosfnd-p4-cp2-u1.pdf Price Elasticity when computed is negative, as price and demand of a product are inversely related. However elasticity is stated usually without the sign & is written as a positive number. The value of elasticity varies from 0 to infinity In your question if 50% change in price results in 50% change in demand then elasticity is Unitary i.e exactly 1 with +ve sign Elasticity is greater than one when the percentage change in quantity demanded is greater than the percentage change in price. In such a case, demand is said to be elastic. Elasticity is less than one when the percentage change in quantity demanded is less than the percentage change in price. In such a case, demand is said to be inelastic

Sriram Somayajula

Admin

17-Jun-20 13:10

Here demand is in same direction so which sign we should allot to it 1or-1

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Rupesh Virat

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19-Jun-20 00:30

Here demand and price is in same direction .so my question is if price increases by 50 percentage then if demand exeptionally increased by 50 percentage then we allot positive sign or negative sign

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Rupesh Virat

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19-Jun-20 00:39

Iam not asking about proportions. My question is if price increases demand increased expectionally then which sign we should allot to it positive or negative

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Rupesh Virat

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19-Jun-20 00:42

Which sign we will take

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Rupesh Virat

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19-Jun-20 00:48

Price Elasticity does not have a negative sign. It is always stated as a positive value only

Sriram Somayajula

Admin

19-Jun-20 07:22

Relation between price and demand is opposite

Zeeyan KOKA

CA Foundation

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18-Aug-20 13:39

+1,-1

Vivek raj gaming

CA Foundation

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05-Sep-20 22:34