Question
Consider the demand curve D(p) = 10 – 3p. What is the elasticity at price $\frac{5}{3}?$
$\text{b}=\triangle\text{Q}/\triangle\text{P}=3$
p = 5/3 or D(5/3) = 10 – 3 × 5/3 Q = 10 – 5 = 5$^{\text{e}}\text{d}=\frac{\triangle\text{Q}}{\triangle\text{P}}\times\frac{\text{P}}{\text{Q}}$
= -3 × (5/3)/5
ed = –1
i.e., the elasticity of demand at price p = 5/3 unitary elastic.
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| (Rs. in crores) | ||
| 1 | Current transfers from rest of the worth. | 100 |
| 2 | Government final consumption expenditure. | 1,000 |
| 3 | Wages and salaries. | 3,800 |
| 4 | Dividend. | 500 |
| 5 | Rent. | 200 |
| 6 | Interest. | 150 |
| 7 | Net domestic capital formation. | 500 |
| 8 | Profits. | 800 |
| 9 | Employers' contribution to social security schemes. | 200 |
| 10 | Net exports. | (-)50 |
| 11 | Net factor income from abroad. | (-)30 |
| 12 | Consumption of fixed capital. | 40 |
| 13 | Private final consumption expenditure. | 4,000 |
| 14 | Net indirect tax. | 300 |
| Output(Units) | Price(Rs.) | Total Revenue(Rs.) | Marginal Revenue(Rs.) |
| 4 | 9 | 36 | - |
| 5 | - | - | 4 |
| 6 | - | 42 | - |
| 7 | 6 | - | - |
| 8 | - | 40 | - |