A consumer buys 18 units of a good at a price of Rs. 9 per unit. The price elasticity of demand for the good is (−) 1. How many units the consumer will buy at a price of Rs. 10 per unit? Calculate.
Initial quantity demanded = 18
Initial price =Rs 9 per unit
New price = Rs 10 per unit
Price elasticity of demand (-)1
Price elasticity of demand (ed) = Percentage change in quantity demanded/ Percentage change in price.
ed = (△Q/Q)÷(△P/P)
-1 = (Q2-18)/18 * 9/(10-9)
-1 = (Q2-18)/18 *9/1
(-1/9)*18 = (Q2-18)
-2= (Q2-18)
-2+18 = Q2
Q2 = 16
Therefore, at a price of Rs 10, the consumer will buy 16 units of the goods.
Unemployment is reduced due to the measures taken by the government. State its economic value in the context of production possibilities frontier.