Answer to Question #148787 in Microeconomics for Muhammad Ali

Question

i. If the price of rice per Kg increases from Rs 200 to Rs 300, the quantity demand reduced from 10 Kg units to 8 Kg. Keeping the answer in view if price change by 7%, what happen to Quantity demand of Rice. Give suitable example.

Answer 1

$∆in price = 300-200 = Rs100$$∆ in quantity= 8-10= -2kg$ $Percentage change in price=100/200×100=50$$7×100/50=Rs14$

An increase in price results to a decrease in quantity of good demanded. After an increase in price by Rs 100 the quantity of good demanded decreased by-2kg

An increase of goods demanded by 7% results to a decrease in price by Rs14