Micro

Market Equilibrium

Medium

What will be elasticity of demand of a commodity when its price rises by 20% and quantity demanded falls from 125 units to 75 units?

e=-1

e.=1.25

e.=2

e.=1.75

✅ Correct Option: 3

Option 1 -> Incorrect elasticity value.

Option 2 -> Incorrect elasticity value.

Option 3 -> Correct elasticity value calculated from the given data.

Option 4 -> Incorrect elasticity value.

Hence, Option 3: e=2 -> Price elasticity of demand (e) = (% change in quantity demanded) / (% change in price). Here, quantity falls from 125 to 75 units, so change = -50 units. Percentage change in quantity = (-50/125) × 100 = -40%. Price rises by 20%. Therefore, e = -40%/20% = -2. Taking absolute value, e = 2, indicating elastic demand where quantity demanded changes proportionately more than price change -> correct

2025: 29 May Shift 2

Arrange the following statements in chronological sequence about how government intervention in the form of price control has an impact on the market.

(A) There will be an excess demand for sugar in the market at that price.

(B) Government-imposed upper limit on the price of sugar.

(D) It could end up creating a shortage of sugar in the market.

Choose the correct answer from the options given below:

2026: 15 May Shift 1

When demand of a commodity is equal to that of its supply in the market then the price of this commodity is called?

2025: 26 May Shift 2

Price ceilings are also known as............

2026: 6 June Shift 1

Equilibrium in a perfectly competitive market can be defined alternatively as:

2025: 28 May Shift 2

A market where firms can choose where to locate production and workers can choose where to work is called?

2025: 3 June Shift 2

The price and quantity demanded are __________

What will be elasticity of demand of a commodity when its price rises by 20% and quantity demanded falls from 125 units to 75 units?

Solution

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