CA Foundation P4 · Chapter 2 · Question 9 of 15
The demand function for a product is Q = 100 - 4P. What is the point price elasticity of demand at P = Rs. 15?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 1.5
Explanation
At P = 15, Q = 100 - 4(15) = 40. dQ/dP = -4. Point elasticity = (dQ/dP) x (P/Q) = 4 x 15/40 = 60/40 = 1.5 (absolute value). 0.67 is the inverse of the correct value; 0.6 uses P/Q = 15/100 incorrectly.
More Theory of Demand and Supply MCQs
- Q11The marginal utilities a consumer derives from successive units of a commodity are 50, 40, 30, 20 and 10 utils. One util equals Re 1 and…
- Q12An indifference curve is normally convex to the origin because of:
- Q13A consumer has an income of Rs. 600 to spend on goods X (Rs. 20 each) and Y (Rs. 30 each). If her income and both prices are doubled, her…
- Q14When the price of a good rises from Rs. 40 to Rs. 50, quantity supplied rises from 200 units to 260 units. Price elasticity of supply…
- Q15A straight-line supply curve that passes through the origin has a price elasticity of supply: