Answer :

Elasticity of demand = percentage change in the quantity demanded/ percentage change in the price


-0.2 = percentage change in the quantity demanded/ 5


Percentage change in the quantity demanded = -0.2 * 5 = 1


(b) (-) 3.1, (–) 0.2, (-) 1.1


The following coefficients of price elasticity of demand in


ascending order is:


(–) 3.1, (–) 1 �1, (–) 0.2,


OR


If the taste of preference of consumer changes in favor of the commodity, the demand for the commodity will increase and the demand curve will shift to the right.



Initially, the price is9 OP, the quantity demanded is OQ1. With the change in the taste and preference of the consumer in favor of the commodity, the demand curve shifts to the right from D to D1.. At the same price OP now the consumer would purchase more units of the commodity at OQ2.


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