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## QuestionClass 11

Suppose a department store has a sale on at silverware, if the price of a plate setting is reduced from Rs. $$300$$ to Rs. $$200$$ and the quantity demanded increase from $$3000$$ plate-sittings to $$5000$$ plate sittings, what is the price elasticity of demand for silverware?
(A) $$.8$$
(B) $$1.0$$
(C) $$1.25$$
(D) $$1.50$$

We know are elasticity method as
$$=\dfrac{Q-Q1}{Q+Q1}\ast\dfrac{P+P1}{P-P1}$$
$$=\dfrac{3000-5000}{3000+5000}\ast\dfrac{300+200}{300-200}$$
$$=1.25$$.
So, Arc elasticity =1.25
(differences were large hence arc elasticity is used.)