Answer :

Given


Q1=10


Q2=14


Del(Q)=4


% change in price= 4/10x100=40%


Price elasticity of demand=% change in quantity/ % change in price


• -1.25=-Q/(4)


• Q=4x1.25


• 5


OR


(a) False


When the price of the product increases then the demand for its alternative product increases.


(b) False


Luxury goods have a higher price elasticity of demand because the fluctuation in its price affect it.


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