IGNOU BECC 101 2026 2027 - Given the following information, find out the price elasticity of dema

Question

Given the following information, find out the price elasticity of demand and cross elasticity of
demand:
??=??−??+??
where ?? is the quantity demanded, P is the price of the product which is given as Rs. 10, and ??
is
the price of the substitute good which is given as Rs 20.

11 Aug 2026

Answer :

Word Count : 638

The demand function is given in the form [ Q_d = A-BP+CP_s ] where (Q_d) represents the quantity demanded, (P) represents the price of the product, and (P_s) represents the price of the substitute good. The given price of the product is (P=Rs.\ 10), while the price of the substitute good is (P_s=Rs.\ 20). To calculate price elasticity of demand and cross elasticity of demand, we use the point elasticity formulas: [ E_p=\frac{dQ_d}{dP}\times\frac{P}{Q_d} ] and [ E_c=\frac{dQ_d}{dP_s}\times\frac{P_s}{Q_d} ] The numerical coefficients in the question are not visible in the supplied equation, so the exact numerical values of the elasticities cannot be determined from the text as displayed. For example, if the intended demand function is [ Q_d=100-5P+2P_s, ] the calculation would proceed as follows. First, substitute the given prices into the demand function: [ Q_d=100-5(10)+2(20) ] [ Q_d=100-50+40 ] [ Q_d=90 ] Thus, the quantity demanded at the given prices is 90 units. For price elasticity of demand, differentiate the demand function with respect to the price of the product (P): [ \frac{dQ_d}{dP}=-5 ] The price elasticity of demand is therefore: [ E_p=\frac{dQ_d}{dP}\times\frac{P}{Q_d} ] [

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