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Class 11 - Economics
Sample Paper - 11 (2023-24)

Maximum Marks: 80
Time Allowed: : 3 hours

General Instructions:

1. This question paper contains two sections:

Section A – Micro Economics
Section B – Statistics
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions type questions of 6 marks each to be answered in 100 to 150 words.

Section A
1. Assertion (A): Statistics is very widely used in all sciences but it is not without limitations.
Reason (R): It is necessary to know the misuses and limitations of statistics.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
2. ________ mean importance assigned to different commodities included in the index
a) None of these
b) Weights
c) Price
d) Both Weights and Price
3. The diagrammatic representation of two variables is called _________
a) Bar Diagram
b) None of these
c) Scatter diagram
d) Histogram
4. Taking 1999 as base year calculate index number of the year 2004
Year 1999 2000 2001 2002 2003 2004

Price (Rs) 10 14 16 20 22 24
a) 210
b) 240
c) 230
d) 220
5. A series of numerical figures which show the relative position is called:
a) Rational number
b) Relative number
c) Index number

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d) Absolute Number
6. A weighted aggregate price index where the weight for each item is its base period quantity is known as the
a) Producer Price Index
b) CPI
c) Paasche Index
d) Laspeyres Index
7. Statistics as a singular noun means:
a) Statistical Data
b) Descriptive Statistics
c) Inductive Statistics
d) Statistical Methods
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8. In a frequency diagram, data is represented in the form of grouped or class frequency distributions. Which of the
following forms a frequency diagram?
a) Histograms, Class Frequency and Ogive
b) Histograms, Frequency Polygons and Ogive
c) Ogive, Frequency Polygons and Time series
d) Histograms, Frequency Curve and Time series
9. Paasche index is based on
a) Average of current and base year
b) Current year quantities.
c) Base year quantities
d) None of these
10. Find out Karl Pearson’s coefficient of correlation in the following series relating to prices and demand of a commodity.
Price (Rs.) 11 12 13 14 15 16 17 18 19 20

Demand 30 29 29 25 24 24 24 21 18 15
a) 0.92
b) 0.94
c) 0.98
d) 0.96
11. A price index of two items of A and B is being estimated. If two items are assigned weights of 64 and 36 respectively,
then the price index becomes 279. Similarly, if they are assigned weights of 50 each, then the price index turns out to be
265. Determine the individual price index number of items A and B.
12. Mode is the best representative value of all items of the series because it is that value which occurs most frequently in
the series. State any four advantages of mode in the context of above statement.

OR

Calculate the weighted mean of the following distribution.

Items 12 29 14 41

Weight 6 4 5 2
13. Differentiate between Simple table and complex table with examples.
14. Differentiate between Sub Divided and Multiple Bar Diagram.

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OR

Briefly discuss important guidelines while constructing graphs.

15. Does the lottery method always give you a random sample? Explain.
16. Calculate coefficient of correlation between age group and rate of mortality from the following data:
Age Group 0 - 20 20 - 40 40 - 60 60 - 80 80 - 100
Mortality 350 280 540 760 900
17. Given the following data on monthly wages of 1000 workers, frequency of two class interval are missing. Locate these if
the Median of the series is 56.
Wages (in Rs000's) 20-30 30-40 40-50 50-60 60-70 70-80

Number of Workers 60 60 ? 200 ? 285

OR

Wage rate of 19 workers is given below

Wages (in Rs.) 10 20 30 40 50

Number of Workers 4 5 3 2 5

Calculate arithmetic mean using step deviation method.

Section B
18. In case of extension of supply we move:
a) to rightward shift on the another supply curve
b) to leftward shift on the another supply curve
c) from lower point to upper point on same supply curve
d) from a upper point to lower point on same supply curve
19. The problem of what to produce relates to:
a) the choice of goods and services
b) the choice of technique
c) distribution of income
d) market value of the goods and services
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20. Which one of the following does NOT occur in perfect competition?
A. Firms already in the industry have no advantage over potential new entrants.
B. No single firm can exert a significant influence on the market price of the good.
C. There are many buyers.
D. There are significant restrictions on entry into the industry.
a) Only D
b) Only B
c) Only A
d) Only C
21. AR is nothing but demand curve.
a) None of these
b) No

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c) Can’t say
d) Yes
22. When the production level is zero, then the fixed cost is:
a) zero
b) positive
c) negative
d) equal to variable cost
23. Assertion (A): When the law of demand fails, the inverse relationship between price and quantity does not hold good.
Reason (R): The demand curve may slope upward showing higher purchases at a higher price.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
24. When a firm’s average revenue are more than its average total cost its profit will be?
a) No profit
b) Normal profit
c) None of above
d) Supernormal profit
25. If TR is ₹1,00,000 when ₹20,000 units are sold, then AR is equal to:
a) ₹5
b) ₹20,000
c) ₹1,00,000
d) ₹1,20,000
26. If a firm produces zero output in the short period, then:
a) MC will be zero
b) FC will be positive
c) VC will be positive
d) TC will be zero
27. The qty to be sold by a firm under perfect competition is also fixed by the market.
a) True
b) Can’t say
c) None of these
d) FALSE
28. Explain the problem 'How to produce'.

OR

Why is a production possibility curve concave? Explain.

29. Explain the implications of ‘homogeneous products’ feature of perfect competition.
30. How is the demand of a commodity affected by a fall in the prices of related goods?
31. From the following schedule, find out the level of output at which the producer is in equilibrium. Give reasons for your
answer.
Output (Units) 1 2 3 4 5 6 7

Price (Rs.) 24 24 24 24 24 24 24

Total Cost 26 50 72 92 115 139 165

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OR

What is meant by producer's equilibrium? When will a producer be in equilibrium in case of losses?
32. A consumer consumes only two goods X and Y and is in equilibrium. Price of X falls. Explain the reaction of the
consumer through the Utility Analysis.
33. Find out the missing values from the following table:
Variable Factors 0 1 2 3 4 5 6 7

TP (in units) - - - - 25 - - -

AP (in units) - 5 - - - - - -
MP (in units) - - 8 4 - 5 0 -4
34. Answer the following questions
1. As a result of 10% fall in price of a good, its demand rises from 10 units to 12 units. Calculate price elasticity of
demand.
2. Price elasticity of demand for a good is (-)1. When its price per unit falls by one rupee, its demand rises from 16 to
18 units. Calculate the price before the change.

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Class 11 - Economics
Sample Paper - 11 (2023-24)

Solution

Section A
1. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: Statistics is very widely used in all sciences but it is not without limitations. It is necessary to know the
misuses and limitations of statistics.
2. (b) Weights
Explanation: The term weight refers to the relative importance of the different items in the construction of index
numbers.
3. (c) Scatter diagram
Explanation: A scatter diagram is a graph in which the values of two variables are plotted along the 2 axis.
4. (b) 240
Explanation: Here we calculate simple Index No. = P1
× 100
P0

= 24
× 100 = 240
10

5. (b) Relative number

Explanation: Relative numbers or values are dependent on other numbers. In other words, they are relative to other
(absolute) numbers. A series of numerical figures which show the relative position is called Relative number.
6. (d) Laspeyres Index
Explanation: Laspeyer assumed that quantities bought in base year and current year are the same . So, based on q0 as
weight.
7. (d) Statistical Methods
Explanation: Statistics as singular refers to the subject of 'statistics' or statistical methods.
8. (b) Histograms, Frequency Polygons and Ogive
Explanation: Data in the form of grouped frequency distributions are generally represented by frequency diagrams like
histogram, frequency polygon, frequency curve and ogive. These can be prepared only if class intervals are given.
They cannot be prepared from discrete data.
9. (b) Current year quantities.
Explanation: A weighted aggregative price index using current period quantities as weights is known as Paasche’s price
index.
10. (b) 0.94
Explanation:
Price(X) DD(Y) dx dy dx2 dy2 dxdy
11 30 -5 -6 25 36 30
12 29 -4 -5 16 25 20

13 29 -3 -5 9 25 15
14 25 -2 -1 4 1 2
15 24 -1 0 1 0 0

16 24 0 0 0 0 0
17 24 1 0 1 0 0

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18 21 2 3 4 9 6
19 18 3 6 9 36 18
20 15 4 9 16 81 36

-1 1 85 213 127
N ∑ dxdy−∑ dx ∑ dy
r=
2 2 2 2
√N ∑(dx) −(∑ dx) √N ∑(dy) −(∑ dy)

10(27)−(−1)(1)
= = 0.94
2 2
√10(85)−(−1) √10(213)−(1)

11. An index number is simply compiled by selecting a group of commodities, noting their prices in a given year (the base
year) and putting the number 100 to the total.
There are two situations in the given conditions. Let I1 be the index for the first item and I2 be the index for the second
item.
64I1 +36I2 I1 W1 +I2 W2
First Situation 279= = 64+36
[∵ P01 =
W1 +W2
] ...(1)
50I1 +50I2
Second Situation 265 = 50+50
...(2)
From equation (1), 64I1+36I2 = 279 x 100 ⇒ 64I + 36 I = 27900 ⇒16I1 + 9I2 = 6975 ...(3)
1 2

From equation (2), I1 + I2 = 530 _(4)

On solving equation (3) and equation (4), we get I1 = 315, I2 = 215
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12. Mode is the best representative value of all items of the series because
i. Mode is easy to calculate and can be easily understood. Mode can be located by inspection only.
ii. Mode can be calculated even in case of open-end classes.
iii. Mode is not affected by the extreme values in a series.
iv. Mode helps in describing the qualitative aspects of the phenomenon.

OR

For calculating the weighted mean, we have to multiply each item of the series by its weights, i.e. X has to be multiplied
by W and then we have to find the total of XW i.e. ΣXW .

Calculation of Weighted Mean

X W XW
12 6 72

29 4 116
14 5 70
41 2 82

ΣW = 17 ΣXW = 340

¯¯¯¯
Weighted mean = X
ΣXW 340
W = = = 20
ΣW 17

Thus, X
¯¯¯¯
W
= 20

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13. Simple and Complex table:
The distinction between simple and Complex table is based on the number of characteristics studied. In a simple table
only one character is shown. Hence this type of table is also known as one-way table. On the other hand, in a complex
table two or more characteristics are shown. When two characteristics are shown such a table is known as two-way table
or double tabulation.
Example of one way table: Number of employees in State bank according to age group
Age (in years) No. of employees
Below 25 3
25-35 2
35-45 2
Above 45 3

When two characteristics are represented in the same table, it is called two-way tabulation. As the number of
characteristics increases, the tabulation becomes so complicated and confusing.
Example of two-way table: Number of employees of state bank in different age groups according to sex.
Employees
Age (in years)
Males Females Total
Below 25 3 2 5
25-35 4 5 9

35-45 5 6 11
Above 45 2 3 5
Total 14 16 30

14. Sub divided Bar Diagram Multiple Bar Diagram

In Sub divided bar diagram, different components are shown In multiple bar diagram, different components are
in single bar with divisions. shown in different bars.
In multiple bar diagram, not more than three items can
In Sub divided bar diagrams, 4-5 variables can be shown.
be shown comfortably.
It cannot be used to compare relative importance of different It can be used to compare relative importance of
components. different components.

OR

The following general guidelines are taken into consideration while preparing graphs:
1. Title: Each graph should have a suitable title. It may be given either at the top of the graph or below it. The title must
convey the main the me which the graph intends to portray.
2. Size: The size and portion of each component of a graph should be such that all the relevant characteristics of the
data are properly displayed and can be· easily understood.
3. Proportion of length and breadth: An appropriate proportion between the length and breadth of the graph should be
maintained. As such there are no fixed rules about the ratio of length to width.
4. Proper scale: There are again no fixed rules for selection of scale. The graph should neither be too small nor too
large. The scale for the graph should be decided after taking into consideration the magnitude of data and the size of
the paper on which it is to be drawn. The scale showing the values as far as possible should be in even numbers or in
multiples of 5, 10, 20, and so on. The scale should specify the size of the unit and the nature of data it represents, for

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example, 'millions of tone’s', in Rs. thousand, and the like. The scale adopted should be indicated on both vertical and
horizontal axes if different scales are used. Otherwise, it can be indicated at some suitable place on the graph paper.
5. Footnotes and source note: To clarify or elucidate any points which need further explanation but cannot be shown in
the graph, footnotes are given at the bottom of the graphs. 6. Index: A brief index explaining the different types of
lines, shades, designs, or colours used in the construction of the graph should be given to understand its contents.
6. Simplicity: Graphs should be prepared in such a way that they can be understood easily. To keep it simple, too much
information should not be loaded in a single graph as it may create confusion. Thus if the data are large, then it is
advisable to prepare more than one graph, each depicting some identified characteristic of the same data.
15. Lottery method always gives a random sample if it is used in the proper manner without any bias. If the slips are
prepared properly, thoroughly shuffled and drawn out one by one, so that all the slips have an equal chance of being
selected in the sample, it will definitely give a random sample. Also, this method is independent of the properties of
population. But, if the slips are not made of identical size and identification is possible of the names or numbers on the
slips, the selection will become biased. Similarly, if the same name or number is written on more than one slip and if
some name or number is missed and if the slips are made in such a way that the identification of some particular values
is possible then also the chances of selection of different units of population in the sample will not be equal. Sometimes a
set of slips is used to many times that the slips are worn or damaged such that the identification of some particular units
becomes easier which results in biases. In such cases, even lottery method will not give a random sample.
dy
dx'( , dy'( ,
dx
Age Mid dx(X - A), ) Rate of dy(Y - A), )

dx'2 dy'2
c1 c2
dx'dy'
Group Value(X) A = 50 c1 = 20 Mortality(Y) A = 540 c2 = 10
16.
0 - 20 10 -40 -2 4 350 -190 -19 361 38

20 - 40 30 -20 -1 1 280 -260 -26 676 26

40 - 60 50 0 0 0 540 0 0 0 0
60 - 80 70 20 1 1 760 220 +22 484 22

80 -
90 40 2 4 900 360 +36 1296 72
100

Σdx'2 dy'2 =
Σ Σ dx'dy'
Total Σ dx' = 0 Σ dy' = 13
= 10 2817 = 158

Here, n = 5, Σ dx' = 0,Σ dx'2 = 10, Σ dy' = 13, Σ dy'2 = 2817, Σ dx' dy ' = 158
′ ′
Σdx ×Σdy
′ ′
Σdx dy −

Now, r =
n

′ 2 ′ 2
(Σdx ) (Σdy )
√ ′2 √ ′2
∑ dx − × Σdy −
n n

0×13
158−
5
=
2 2
(0) (13)
√10− ×√2817−
5 5

158
=
169
√10−0 ×√2817−
5

158
=
√10 ×√2817−33.8

= +0.95
158 158 158
= = =
√10 ×√2783.2 3.16×52.8 166.8

Therefore, Karl Pearson's coefficient of correlation between age group and rate of mortality is 0.95
Interpretation of r: There is high degree of positive correlation between age group and rate of mortality.
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17. Let the frequencies be f1 for a class interval of 40-50 and f2 for class interval of 60-70
The cumulative frequency for the given data is calculated as follows:
Wages (in Rs. (X) Number of Workers(f) Cumulative Frequency (cf)

20-30 60 60
30-40 60 120

40-50 f1 120+f1

50-60 200 320+f1

60-70 f2 320+f1+f2

70-80 285 605+f1+f2

n=Σ f=1000

Here, n=1000
Sum of
Median= 56 (given) frequencies=1000
(given)

n 1000
∴ m = Size of ( ) th item = ( ) th item
2 2

Here, f1 and f2 are unknown so we cannot find the cf equal of just greater than 500 ⇒ 60 + 60 f1 + 200

but Median= 56 is given and it lies in the interval 50-60 so median class is 50-60. + f2 + 285=1000
∴ l1=50, c f=120 + f1, f=200, c=10 ⇒ 605 + f1 + f2
n
−cf
=1000
Now, M
2
= l1 + × c
f
⇒ f1 + f2 =1000 -
500−120−f
1
⇒ 56 = 50 + ( ) × 10
200
605
380−f
1
⇒ 56 = 50 + (
20
)
f1 + f2 =395
380−f 380−f
f2 =395 - 260
1 1
⇒ 56 − 50 = ⇒ 6 = ∴
20 20

⇒ 380 - f1=6 × 20 ⇒f1=380 - 120 =135 [∵ f 1 = 260]

⇒ f1=260

Hence, frequency of 40-50 class=260; frequency of 60-70 class =135.

OR

Calculation of Arithmetic Mean

Wages (in Number of dx (X-A) Product of Step Deviation and

d'x ( c=10
dx
)
Rs. (X) Workers (f) (A=30) c
Frequency (i.e., fd' x)

10 4 -20 -2 -8
-13
20 5 -10 -1 -5
30 3 0 0 0 0

40 2 10 +1 +2 +12

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50 5 20 +2 +10
′
Σf = 19 Σf d X = −1

Now,
′
¯¯¯¯ Σf d x
X = A+ × c
Σf

Here,
A = Assumed value of mean = 30
C = Common factor chosen = 10
′
Σf d X =Sum of Product of Step Deviation and Frequency = -1
Σf = Sum of frequencies =19

Putting the values in the given formula:

¯¯¯¯ (−1)
X = 30 + × 10
19

= 30 - 0.053× 10
= 30 - 0.53= 29.47
Hence, required arithmetic mean (X )
¯¯¯¯
= 29.47

Section B
18. (c) from lower point to upper point on same supply curve
Explanation: When the seller moves from left to right upward, the price of ‘X’ increases and Qx also increases, it is
called an extension of supply.
19. (a) the choice of goods and services
Explanation: The problem relates to the production of different goods and services in an economy. More of one good
would always mean less of the other. This is when the resources are given and technology is constant.
20. (a) Only D
Explanation: There is no restriction on entry and exit of firms in perfect competition.
21. (d) Yes
Explanation: Because AR is nothing but the price of the good. So AR curve is the same as demand curve.
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22. (b) positive
Explanation: Fixed costs are those costs which are related to the use of fixed factors. These costs do not change with the
change in the volume of output. Fixed costs are incurred even when output is zero.
23. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: When the law of demand fails, the inverse relationship between price and quantity does not hold good.
Instead, the demand curve may slope upward showing higher purchases at a higher price.
24. (d) Supernormal profit
Explanation: The firm will earn super normal profits when AR > AC as total costs will be less than the total revenue.
25. (a) ₹5
Explanation: AR = TR/q = ₹1,00,000/₹20,000
Where, output is (q).
= ₹5
26. (b) FC will be positive
Explanation: At zero level of output, TVC is zero and TC is just the fixed cost (FC) because in the short run, fixed cost
cannot be changed. Therefore, FC will be positive

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27. (d) FALSE
Explanation: The firm is free to sell any qty under perfect competition.
28. The central problem 'How to Produce' is the problem of choosing the appropriate technique of production for producing
goods.There can be more than one method for producing a good.
More labour and less capital (i.e., labour intensive technique) or more capital and less labour (i.e., capital intensive
technique) can be used for production of a good.
Since resources are scarce, decision has to be taken about which technique should be used on the basis of availability of
recources.
Example : A given quantity of cloth can be manufactured by combining factors of production in different proportions,
making it capital-intensive or labour intensive method.

OR

The production possibility curve being concave means that Marginal Rate Transformation increases as we move
downward along the curve. MRT increases because it is assumed that no resource is equally efficient in the production of
all goods. As resources are transferred from one good to another, less and less efficient resources have to be employed.
This raises the cost and raises MRT. It is because resources like labour or capital must be relocated to produce weapons.
Most of the PPF curves are concave due to the inadaptability of the resources. The law of increasing opportunity cost
states: as the production of one good rises, the opportunity cost of producing that good increases.
29. In Perfect Competition, all sellers sell identical units of a product or all units of goods are identical in color, shape, size
or packing of the product of each seller. A buyer will have no reason to prefer the product of any particular seller.
Implications:
i. There are no selling costs(cost of marketing and selling a product)
ii. Because of homogeneous products (one that cannot be distinguished from competing products from different
suppliers), there is a single price in the whole market.
iii. Transportation costs may also be avoided.
iv. he negative implication of this feature is that the consumers are deprived of the different varieties of products like
garments.
Related goods are of two types: Substitute goods and Complementary goods.
30. The effect on the demand of a commodity by a fall in the prices of related goods is explained as follows:

In case of substitute goods In the case of complementary goods

Fall in the price of the substitute good of good When the price of the complementary good of good X falls, then
X will reduce the demand for good X because demand good X will rise This is because fall in price will lead
consumers will start consuming the substitute increase in demand.Demand Curve DD shifts rightwards to D1D1
good in place of good X. when the price of complementary good falls

TC TR (Rs.) Profit (Rs.)

Output (Q) Price(P)
31. (Rs.) TR = Q × P = TR - TC

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1 24 26 24 -2
2 24 50 48 -2

3 24 72 72 0

4 24 92 96 4
5 24 115 120 5

6 24 139 144 5

7 24 165 168 3
Equilibrium refers to a state of rest when no change is required. A firm (producer) is said to be in equilibrium when it
has no inclination to expand or to contract its output. The producer achieves equilibrium at 6 units of output. It is because
this level of output satisfies both the conditions of producer’s equilibrium:
i. The difference between TR and TC is positively maximised.
ii. Total profits fall after that level of output.

OR

Producer’s Equilibrium: Equilibrium represents a state of no change. A firm is said to be in equilibrium when it does
not incline to expand or to contract its output. Producer’s Equilibrium refers to the state where a producer is earning the
maximum possible profit by producing a particular level of output. A producer would be in the state of equilibrium if he
is earning a maximum profit, i.e. has profit maximisation. It is referred to as 'equilibrium' because a producer has no
incentive to move away from this point, as such deviation will reduce his/her profit.
If a firm may suffer losses, and yet continue to stay in the market, it does not suspend its production activity. This
happens in a short period. Because in the short period, a firm is confronted with 2 sets of costs – (i) fixed cost, and (ii)
variable cost. Fixed cost is incurred even when output is zero. A firm has to bear the loss of fixed costs even when
production is stopped. Accordingly, a firm may decide to continue production so long as variable costs are
covered. Thus, production may continue as long as TR ≥ TVC.
In this case, the producer will reach its equilibrium at the point where the price is equal to or greater than the minimum
of the short-run average variable cost curve (SAVC). This is because if a producer is incurring losses then he must be
selling his product at a price lower than the minimum of SAVC. Thus, in order to reach equilibrium, he will have to sell
the output at a price that is equal to or greater than the minimum of SAVC.
In case of the long run, when all costs are variable costs, a firm will undertake production only when all costs are
covered. Otherwise, it will quit the industry.
32. As we know condition for consumer equilibrium for two commodities is -
Marginal utility of last rupee spent on each commodity is same.
Suppose there are two commodities, X and Y respectively.
So, for commodity X, the condition is,
Marginal Utility of Money = Price of X
M arg inal Utility of a

Pr oduct in Util [M Ux ]
or
M arg inal Utility of

One Rupees [M UR ]

MUx
or Px
= M UR ...(i)
Similarly, for commodity Y, the condition is,
MUy

Py
= M UR ...(ii)
Putting equation (2) in (1), we get
MUx MUy
=
Px Py

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But it is given that the price of X falls , because of which the consumer will buy more of good X as utility from good X
is higher. So, the ratio of marginal utility to price in case of X will become higher than that in case of Y, i.e.,
MUx MUy
>
Px Py

It means marginal utility from the last rupee spent on commodity X is more than marginal utility from the last rupee
spent on commodity Y. So, to attain the equilibrium the consumer must increase the consumption of X, which in turn
will decrease the MU derived from X and decrease the consumption of Y, which will increase the MUy. Increase in
MUx MUy
consumption of X and decrease in consumption of Y continue till Px
=
Py
and thus equilibrium is attained. .
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33. The missing values as per the given table in the question can be found as follows:
Variable Factors TP (in units) AP (in units) MP (in units)
(VF) TP =ΣM P AP = TP÷ VF MPn = TPn - TPn-1

0 0 0 0

1 5 5 5
2 13 6.50 8

3 17 5.67 4

4 25 6.25 8
5 30 6 5

6 30 5 0

7 26 3.71 -4
34. Answer the following questions
1. Percentage increase in demand
ΔQ = 12 − 10 = 2
ΔQ 2
× 100 = × 100 = 20%
Q 10

P ercentage change in demand

Ed =
P ercentage change in Pr ice

20
= 2
10

Ed = 2 or Ed > 1

2. Given,
Elasticity of demand (Ed) = (-)1
Old Price (P) =?
Change in Price (AP)= (-)1
Old Quantity (Q) = 16 units
Change in Quantity = 2 units (18 - 16)
We know that,
P Δ Q
E d = ×
Q Δ P

P 2 P
−1 = × ⇒ −1 =
16 −1 8x−1

⇒ P = −1 × −8 = 8

∴ Price before change = Rs 8.

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