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Theory of demand

When demand and quantity demand is in same direction then elasticity of demand is positive or negative


Rupesh Virat

Rupesh Virat

CA Foundation

180

16-Jun-20 09:00

29

Answers (13)

Query is not clear. if you are referring to this based on a book, please share a screenshot. will be helpful


Sriram Somayajula

Sriram Somayajula

Admin

16-Jun-20 18:07

Query is not clear. if you are referring to this based on a book, please share a screenshot. will be helpful

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


Rupesh Virat

Rupesh Virat

CA Foundation

180

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

Madhuri Veluri

Moderator

16-Jun-20 19:36

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) .

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


Rupesh Virat

Rupesh Virat

CA Foundation

180

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

Madhuri Veluri

Moderator

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

Sriram Somayajula

Admin

17-Jun-20 13:10

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


Rupesh Virat

Rupesh Virat

CA Foundation

180

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


Rupesh Virat

Rupesh Virat

CA Foundation

180

19-Jun-20 00:39

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.

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


Rupesh Virat

Rupesh Virat

CA Foundation

180

19-Jun-20 00:42

Which sign we will take

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


Sriram Somayajula

Sriram Somayajula

Admin

19-Jun-20 07:22

Relation between price and demand is opposite


Zeeyan KOKA

Zeeyan KOKA

CA Foundation

3K+

18-Aug-20 13:39