The demand of goods x and y have equal price elaeticy. The demand of x rises from from 100 units to 200 units due to 20 % fall in its price. Calculate % rise in demand of y, if its price falls by 8%.

Explanation

Change in `QD_(x) = (DeltaQ)/Qxx100 = 100/100xx 100= 100%`
`P.e_(D) of x = (%" Change in" QD_(x))/(%" Change in" P_(x))`
` P.e_(D) of x = (+100%)/ ((-) 20%) = (-)5`
As given in the question x and y have same elasticity
`p.e_(D) of Y = ( % " Change in " QD_(y))/( %" Change in" P_(y)) `
` -5= ( % " Change in" QD_(y))/(-8%)` % change (rise) in demand of y = 40%