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Relationship between elasticity of demand and total revenue

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(A) What is the relationship between elasticity of demand and total revenue? Explain

(B) Solve the following

(i) A consumer purchased 10 units of a commodity when its price was $ 5 per unit. He purchased 12 units of the commodity when its price falls to $ 4 per unit. What is the price elasticity of demand for the commodity at that price?

(ii). As a result of 10 per cent fall in price of a good, its demand rises from 100 units to 120 units. Find out the price elasticity of demand.

(iii). A certain quantity of the commodity is purchased when its price is $ 10 per unit. Quantity demanded increases by 50 per cent in response to a fall in price by $ 2 per unit. Find elasticity of demand.

(iv). A consumer buys 80 units of a good at a price of $ 4 per unit. When the price falls, he buys 100 units. If price elasticity of demand is (-) 1, find out the new price.

(v). A commodity shows Ed = (-) 2. Quantity demanded reduces from 300 units to 150 units in response to increase in price. Find the increased price when initially it was $ 20 per unit.

(vi). When price of a good rises from $ 5 per unit to $ 6 per unit, its demand falls from 20 units to 10 units. Compare expenditures on the good to determine whether demand is elastic or inelastic.

Reference no: EM132500442

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