If the demand for using the Noida express way is given by : Q = 40,000 – 2500P Where Q is the number of users (vehicles) and P is the amount of toll collected per unit who uses the express way. In light of this information which of the following is true :
At P = ₹ 4 and Q = 9,500, demand is price elastic.
Option 3 — At P = ₹4 and Q = 9,500, demand is price elastic is correct.
The price elasticity of demand measures how responsive quantity is to price: \(E = \left|\dfrac{dQ}{dP}\right| \times \dfrac{P}{Q}\). For the linear demand Q = 40,000 – 2500P, the slope \(\dfrac{dQ}{dP} = -2500\), so in absolute terms \(E = 2500 \times \dfrac{P}{Q}\).
Testing option 3: \(E = 2500 \times \dfrac{4}{9500} = \dfrac{10000}{9500} \approx 1.05\). Since \(E \gt 1\), demand is elastic — the statement is true.
Why the other options are wrong: Option 1: \(E = 2500 \times 6/14000 \approx 1.07 \gt 1\), i.e. elastic, not inelastic. Option 2: \(E = 2500 \times 7/16500 \approx 1.06\), not equal to 1, so not unitary elastic. Because options 1 and 2 are false, option 4 ("all of the above") also fails.
Takeaway: Compute \(E = |\text{slope}| \times P/Q\); \(E \gt 1\) means elastic, \(E = 1\) unitary, \(E \lt 1\) inelastic.
Similar Questions
The demand function for commodity X, is \( Q_D = 300 - 20P \); where P is the price in rupees per unit and \( Q_D \) is the quantity demanded in units per period. Which of the following is the price level at which total revenue of a firm facing this demand function is maximised?
The conflict process usually has __________.
As per Lewin’s Three - Step Change Model, changing to overcome the pressures of both individual resistance and group conformity is termed as :
Out of the following, identify the four major functions which communication serves within a group or organisation :
(a) Control
(b) Co-ordination
(c) Emotional expression
(d) Information
(e) Motivation
(f) Organisation
Codes :
__________ is a process of system wide change, designed to make an organisation more adaptive.
Which one of the following is not an example of semantic barrier?
Match the items of the List - I with those of the List - II and indicate the correct code :
List - I List - II (a) Positive income elasticity (i) Substitute goods (b) Negative income elasticity (ii) Complementary goods (c) Positive cross elasticity (iii) Inferior goods (d) Negative cross elasticity (iv) Superior goods Code :
Match the items of the List - I with those of List - II and suggest the correct code from the following :
List - I List - II (a) GDP (i) National income (b) GDP at factor cost (ii) NDP plus Net flow of income from abroad (c) NNP at factor cost (iii) Money value of final goods and services produced (d) NNP (iv) Total gross value added by all enterprises in the economy Code :
Who among the following is known for application of Psychology to industry and management ?
For an economy which consist of single automobile maker and that in year 2014, 30,000 vehicles are produced with an average price of ₹ 5 lakh. For this economy what would be the increase in the nominal GDP for 2015 compared with 2014 with the 4% greater automobile production and 8% inflation.
Important Questions from Miscellaneous
The magazine in which Mahatma Gandhi mentioned what he wanted the Constitution to do is:
Which gas shields the surface of the earth from ultraviolet radiation from the sun?
Which event is marked as an Intangible Cultural Heritage of Humanity by UNESCO?
Who has been conferred with the rank of the Commander of the Order of the British Empire in 2018?
Who directead the film ‘Bhuvan Shome’?
