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All questions of Theory of Demand and Supply for CA Foundation Exam
If the price of any complement goods rises:- a)Demand curve shifts to left
- b)Demand cure shifts to right
- c)Demand curve moves downwards
- d)Demand curve moves upward
Correct answer is 'A'. Can you explain this answer?
If the price of any complement goods rises:
a)
Demand curve shifts to left
b)
Demand cure shifts to right
c)
Demand curve moves downwards
d)
Demand curve moves upward
|
Sahil Malik answered |
Complementary goods are those goods which consume together. for example-car and petrol....when price of car increase then demand of petrol and car decreases because petrol is neccesary to drive a car and when price of car increases then people do not buy car and due to this reason petrol is also not in demand...so demand curve shifts to left....and remember complimentary goods are joint goods
Can you explain the answer of this question below:The Price of a tiffin box is Rs. 100 per unit andthe quantity demanded in a market is 1,25,000units . Company increased the price to Rs.125per unit due to this increase in price quantitydemanded decreases to 1,00,000 units. whatwill be price elasticity of demand ______A:1.25B:1.00C:0.80D:None of the above.The answer is c.
|
Samiksha answered |
Well lets solve this step by step..... Given:- Q=125000 units, Q1=100000 units, change in quantity= - 25000 units, now %change in quantity demand = change in quantity /Q * 100= - 20% .. Now P=Rs 100, P1=Rs 125, change in price=Rs 25, %change in price = change in price/P * 100= 25%... nw price elasticity of demand = %change in quantity demanded /%change in price =-20%/25%=(-)0.8... i think 0.8 will be the answer plz check it once more...
In expansion and contraction of demand ______
- a)Demand curve remains unchanged
- b)Demand curve changes
- c)Slope of the demand curve changes
- d)Both (a) & (c) above
Correct answer is option 'D'. Can you explain this answer?
In expansion and contraction of demand ______
a)
Demand curve remains unchanged
b)
Demand curve changes
c)
Slope of the demand curve changes
d)
Both (a) & (c) above
|
Simran Pillai answered |
And (c) can be true, depending on the specific circumstances.
The price of a commodity decreases from 10 to 8 and the quantity demanded of it increases from 25 to 30 units, then the coefficient of price elasticity will be______.- a)1.00
- b)-1.00
- c)1.5
- d)-1.5
Correct answer is option 'B'. Can you explain this answer?
The price of a commodity decreases from 10 to 8 and the quantity demanded of it increases from 25 to 30 units, then the coefficient of price elasticity will be______.
a)
1.00
b)
-1.00
c)
1.5
d)
-1.5
|
|
Mehul Ghoshal answered |
Solution:
Price elasticity of demand is the measure of the responsiveness of the quantity demanded of a good to a change in its price.
Given, the initial price of the commodity = $10
Final price of the commodity = $8
Initial quantity demanded of the commodity = 25 units
Final quantity demanded of the commodity = 30 units
We can use the formula for price elasticity of demand to calculate it:
Price elasticity of demand = % change in quantity demanded / % change in price
Calculating the % change in price:
% change in price = (final price - initial price) / (initial price) x 100
% change in price = (8-10) / 10 x 100
% change in price = -20%
Calculating the % change in quantity demanded:
% change in quantity demanded = (final quantity demanded - initial quantity demanded) / (initial quantity demanded) x 100
% change in quantity demanded = (30-25) / 25 x 100
% change in quantity demanded = 20%
Substituting the values in the formula:
Price elasticity of demand = % change in quantity demanded / % change in price
Price elasticity of demand = 20% / -20%
Price elasticity of demand = -1
Therefore, the coefficient of price elasticity of demand for this commodity is -1.00, which indicates that the commodity is price elastic.
Price elasticity of demand is the measure of the responsiveness of the quantity demanded of a good to a change in its price.
Given, the initial price of the commodity = $10
Final price of the commodity = $8
Initial quantity demanded of the commodity = 25 units
Final quantity demanded of the commodity = 30 units
We can use the formula for price elasticity of demand to calculate it:
Price elasticity of demand = % change in quantity demanded / % change in price
Calculating the % change in price:
% change in price = (final price - initial price) / (initial price) x 100
% change in price = (8-10) / 10 x 100
% change in price = -20%
Calculating the % change in quantity demanded:
% change in quantity demanded = (final quantity demanded - initial quantity demanded) / (initial quantity demanded) x 100
% change in quantity demanded = (30-25) / 25 x 100
% change in quantity demanded = 20%
Substituting the values in the formula:
Price elasticity of demand = % change in quantity demanded / % change in price
Price elasticity of demand = 20% / -20%
Price elasticity of demand = -1
Therefore, the coefficient of price elasticity of demand for this commodity is -1.00, which indicates that the commodity is price elastic.
When price falls from Rs. 6 to Rs. 4, the demand rises form 10 to 15 units. Calculate price elasticity of demand. (Point elasticity)- a)1.5
- b)3.5
- c)0.5
- d)2
Correct answer is option 'A'. Can you explain this answer?
When price falls from Rs. 6 to Rs. 4, the demand rises form 10 to 15 units. Calculate price elasticity of demand. (Point elasticity)
a)
1.5
b)
3.5
c)
0.5
d)
2
|
|
Maheshwar Sharma answered |
Calculation of price elasticity of demand:
Price elasticity of demand (Ep) = percentage change in quantity demanded / percentage change in price
Given:
Initial price (P1) = Rs. 6
Final price (P2) = Rs. 4
Initial quantity demanded (Q1) = 10 units
Final quantity demanded (Q2) = 15 units
Change in price (ΔP) = P2 - P1 = Rs. 4 - Rs. 6 = - Rs. 2
Change in quantity demanded (ΔQ) = Q2 - Q1 = 15 - 10 = 5 units
Percentage change in price = (ΔP / P1) x 100 = (-2 / 6) x 100 = -33.33%
Percentage change in quantity demanded = (ΔQ / Q1) x 100 = (5 / 10) x 100 = 50%
Substituting these values in the formula of price elasticity of demand:
Ep = (ΔQ / Q1) / (ΔP / P1)
= (50 / 100) / (-33.33 / 100)
= -1.5
The negative sign indicates that the demand is elastic, i.e., a small change in price leads to a relatively larger change in quantity demanded.
Therefore, the correct answer is option 'A' (1.5).
Price elasticity of demand (Ep) = percentage change in quantity demanded / percentage change in price
Given:
Initial price (P1) = Rs. 6
Final price (P2) = Rs. 4
Initial quantity demanded (Q1) = 10 units
Final quantity demanded (Q2) = 15 units
Change in price (ΔP) = P2 - P1 = Rs. 4 - Rs. 6 = - Rs. 2
Change in quantity demanded (ΔQ) = Q2 - Q1 = 15 - 10 = 5 units
Percentage change in price = (ΔP / P1) x 100 = (-2 / 6) x 100 = -33.33%
Percentage change in quantity demanded = (ΔQ / Q1) x 100 = (5 / 10) x 100 = 50%
Substituting these values in the formula of price elasticity of demand:
Ep = (ΔQ / Q1) / (ΔP / P1)
= (50 / 100) / (-33.33 / 100)
= -1.5
The negative sign indicates that the demand is elastic, i.e., a small change in price leads to a relatively larger change in quantity demanded.
Therefore, the correct answer is option 'A' (1.5).
Expansion & contraction of Demand curve occurs due to - a)Change in the price of commodity
- b)Change in price of substitute or complementary goods
- c)Change in income
- d)None
Correct answer is 'A'. Can you explain this answer?
Expansion & contraction of Demand curve occurs due to
a)
Change in the price of commodity
b)
Change in price of substitute or complementary goods
c)
Change in income
d)
None
|
Rajat Patel answered |
When as a result of decrease in price, the quantity demanded increases, in economics we say that there is an expansion of demand and when as a result of increase in price, quantity demanded decreases we say that there is a contraction of demand. Hence, we can conclude that expansion contraction of demand curve occurs due to change in price of a commodity.
Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:- a)0.25
- b)0.50
- c)1.00
- d)1.50
Correct answer is option 'B'. Can you explain this answer?
Original price of a commodity is Rs. 500 and quantity demanded of that is 20 kgs. If the price rises to Rs. 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:
a)
0.25
b)
0.50
c)
1.00
d)
1.50
|
|
Tanvi Pillai answered |
Heading: Calculation of Price Elasticity of Demand
To calculate the price elasticity of demand, we use the following formula:
Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price)
Heading: Calculation of % Change in Quantity Demanded
The % change in quantity demanded can be calculated as follows:
% Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded)/Old Quantity Demanded) x 100
% Change in Quantity Demanded = ((15-20)/20) x 100
% Change in Quantity Demanded = -25%
Heading: Calculation of % Change in Price
The % change in price can be calculated as follows:
% Change in Price = ((New Price - Old Price)/Old Price) x 100
% Change in Price = ((750-500)/500) x 100
% Change in Price = 50%
Heading: Calculation of Price Elasticity of Demand
Using the formula for price elasticity of demand and the % changes calculated above, we get:
Price Elasticity of Demand = (-25%)/(50%)
Price Elasticity of Demand = -0.5
Since price elasticity of demand is usually expressed as an absolute value, we take the absolute value of -0.5 which gives us 0.5.
Therefore, the price elasticity of demand in this case is 0.5 or 0.50 (option B). This means that the demand for the commodity is relatively inelastic as the % change in quantity demanded is less than the % change in price.
To calculate the price elasticity of demand, we use the following formula:
Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price)
Heading: Calculation of % Change in Quantity Demanded
The % change in quantity demanded can be calculated as follows:
% Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded)/Old Quantity Demanded) x 100
% Change in Quantity Demanded = ((15-20)/20) x 100
% Change in Quantity Demanded = -25%
Heading: Calculation of % Change in Price
The % change in price can be calculated as follows:
% Change in Price = ((New Price - Old Price)/Old Price) x 100
% Change in Price = ((750-500)/500) x 100
% Change in Price = 50%
Heading: Calculation of Price Elasticity of Demand
Using the formula for price elasticity of demand and the % changes calculated above, we get:
Price Elasticity of Demand = (-25%)/(50%)
Price Elasticity of Demand = -0.5
Since price elasticity of demand is usually expressed as an absolute value, we take the absolute value of -0.5 which gives us 0.5.
Therefore, the price elasticity of demand in this case is 0.5 or 0.50 (option B). This means that the demand for the commodity is relatively inelastic as the % change in quantity demanded is less than the % change in price.
Can you explain the answer of this question below: The price of a commodity were increased form Rs. 4 to Rs. 6. As a result demand decreased form 15 units to 10 units. What is the price elasticity? (Point elasticity)- A:0.66
- B:0.33
- C:1.00
- D:1.5
The answer is a.
The price of a commodity were increased form Rs. 4 to Rs. 6. As a result demand decreased form 15 units to 10 units. What is the price elasticity? (Point elasticity)
A:
0.66
B:
0.33
C:
1.00
D:
1.5
|
|
Divya answered |
Just use the formula of point elasticity. U will easily find the answer
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______- a)Zero.
- b)Greater than one
- c)Less than one
- d)Infinity
Correct answer is option 'D'. Can you explain this answer?
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______
a)
Zero.
b)
Greater than one
c)
Less than one
d)
Infinity
|
Jayant Mishra answered |
The slope of a straight-line demand curve, one with a constant slope, has constantly changing elasticity. ... No two points on a straight-line demand curve have the same elasticity. The price elasticity of demand is different at each point on a demand curve with constant slope.
What will be the price elasticity it original price is Rs. 5, original quantity is 8 units and changed price is Rs. 6, changed quantity is 4 units:
- a)2.5
- b)2.0
- c)1.5
- d)1.0
Correct answer is option 'A'. Can you explain this answer?
What will be the price elasticity it original price is Rs. 5, original quantity is 8 units and changed price is Rs. 6, changed quantity is 4 units:
a)
2.5
b)
2.0
c)
1.5
d)
1.0
|
Prashanth Datta answered |
Calculation of Price Elasticity:
Price elasticity is calculated with the formula:
Price Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
Percentage Change in Quantity Demanded:
Quantity demanded has decreased from 8 units to 4 units.
Percentage Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded) x 100
= ((4-8)/8) x 100
= -50%
Percentage Change in Price:
Price has increased from Rs. 5 to Rs. 6.
Percentage Change in Price = ((New Price - Old Price) / Old Price) x 100
= ((6-5)/5) x 100
= 20%
Price Elasticity of Demand:
Price Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
= (-50%) / (20%)
= -2.5
Interpretation of Price Elasticity:
As the price elasticity of demand is greater than 1, the demand for the product is elastic. It means that a small change in price will result in a proportionately larger change in quantity demanded. In this case, a 20% increase in price has led to a 50% decrease in quantity demanded. Therefore, the product is price sensitive and consumers are responsive to changes in price.
Answer: a) 2.5
Price elasticity is calculated with the formula:
Price Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
Percentage Change in Quantity Demanded:
Quantity demanded has decreased from 8 units to 4 units.
Percentage Change in Quantity Demanded = ((New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded) x 100
= ((4-8)/8) x 100
= -50%
Percentage Change in Price:
Price has increased from Rs. 5 to Rs. 6.
Percentage Change in Price = ((New Price - Old Price) / Old Price) x 100
= ((6-5)/5) x 100
= 20%
Price Elasticity of Demand:
Price Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
= (-50%) / (20%)
= -2.5
Interpretation of Price Elasticity:
As the price elasticity of demand is greater than 1, the demand for the product is elastic. It means that a small change in price will result in a proportionately larger change in quantity demanded. In this case, a 20% increase in price has led to a 50% decrease in quantity demanded. Therefore, the product is price sensitive and consumers are responsive to changes in price.
Answer: a) 2.5
If the number of customers in the market increases suddenly, the supply will:a) Decreaseb) Increase c) Not be affected d) Depend on the number of customers.Correct answer is option 'C'. Can you explain this answer?
|
Poonam Reddy answered |
In a very short period, supply is fixed as suppliers cannot increase the supply of a commodity. Since, in a very short period price is determined by demand only (supply being constant), thus the price that prevails in the very short period is called market price. Hence if the number of customers in the market increases suddenly, the supply will not be affected.
In expansion and contraction of demand _____.
- a)Both (c) & (d)
- b)Demand curve changes
- c)Slope of the demand curve changes
- d)Demand curve remains unchanged
Correct answer is option 'A'. Can you explain this answer?
In expansion and contraction of demand _____.
a)
Both (c) & (d)
b)
Demand curve changes
c)
Slope of the demand curve changes
d)
Demand curve remains unchanged
|
Freedom Institute answered |
In expansion and contraction of demand, the demand curve remains unchanged, and Slope of the demand curve changes
From which of the following, the concept of consumer’s surplus has been derived?- a)Law of demand
- b)Indifference curve analysis
- c)Law of supply
- d)none
Correct answer is 'A'. Can you explain this answer?
From which of the following, the concept of consumer’s surplus has been derived?
a)
Law of demand
b)
Indifference curve analysis
c)
Law of supply
d)
none
|
|
Harshad Kapoor answered |
Because consumer surplus is the difference between what consumer is ready to pay and what he actually pays
Total utility derived form the consumption of a commodity is equal to Rs. 5. Marginal utility is equal to 1 and consumer has bought 3 units. What will be his consumer surplus?- a)Rs. 2
- b)Rs. 2.5
- c)Rs. 3
- d)Rs. 4
Correct answer is option 'A'. Can you explain this answer?
Total utility derived form the consumption of a commodity is equal to Rs. 5. Marginal utility is equal to 1 and consumer has bought 3 units. What will be his consumer surplus?
a)
Rs. 2
b)
Rs. 2.5
c)
Rs. 3
d)
Rs. 4
|
|
Niharika Chavan answered |
Calculation of Total Utility:
- Total utility = Rs. 5
- This means that the consumer has derived a total satisfaction worth Rs. 5 from the consumption of the commodity.
Calculation of Marginal Utility:
- Marginal utility = 1
- This means that the consumer derives an additional satisfaction of 1 unit from the consumption of each additional unit of the commodity.
Calculation of Consumer Surplus:
- Consumer surplus is the difference between the total amount that the consumer is willing to pay for a commodity and the actual amount paid by the consumer.
- In this case, the consumer has bought 3 units of the commodity.
- The amount that the consumer is willing to pay for the first unit is equal to the marginal utility of the first unit, which is 1.
- Similarly, the amount that the consumer is willing to pay for the second unit is also equal to 1.
- For the third unit, the consumer is willing to pay 1 more unit of satisfaction, which is equal to the marginal utility of the third unit, i.e., 1.
- Therefore, the total amount that the consumer is willing to pay for the 3 units of the commodity is equal to 3.
- However, the consumer has only paid Rs. 3 for the 3 units.
- Hence, the consumer surplus is equal to the difference between the amount that the consumer is willing to pay and the actual amount paid, which is Rs. 2.
Therefore, the correct answer is option 'A', i.e., Rs. 2.
- Total utility = Rs. 5
- This means that the consumer has derived a total satisfaction worth Rs. 5 from the consumption of the commodity.
Calculation of Marginal Utility:
- Marginal utility = 1
- This means that the consumer derives an additional satisfaction of 1 unit from the consumption of each additional unit of the commodity.
Calculation of Consumer Surplus:
- Consumer surplus is the difference between the total amount that the consumer is willing to pay for a commodity and the actual amount paid by the consumer.
- In this case, the consumer has bought 3 units of the commodity.
- The amount that the consumer is willing to pay for the first unit is equal to the marginal utility of the first unit, which is 1.
- Similarly, the amount that the consumer is willing to pay for the second unit is also equal to 1.
- For the third unit, the consumer is willing to pay 1 more unit of satisfaction, which is equal to the marginal utility of the third unit, i.e., 1.
- Therefore, the total amount that the consumer is willing to pay for the 3 units of the commodity is equal to 3.
- However, the consumer has only paid Rs. 3 for the 3 units.
- Hence, the consumer surplus is equal to the difference between the amount that the consumer is willing to pay and the actual amount paid, which is Rs. 2.
Therefore, the correct answer is option 'A', i.e., Rs. 2.
Cardinal approach is related to : - a)Indifference curve
- b)Equi-marginal utility
- c)Law of diminishing returns
- d)None of these
Correct answer is 'B'. Can you explain this answer?
Cardinal approach is related to :
a)
Indifference curve
b)
Equi-marginal utility
c)
Law of diminishing returns
d)
None of these
|
|
Lakshmi Kaur answered |
The cardinal approach is related to Equi-marginal utility.
Explanation:
- Cardinal approach is one of the approaches to measure utility in economics. It emphasizes the quantification of utility and assumes that it can be measured numerically.
- Equi-marginal utility is a concept in economics that assumes that a rational consumer allocates his/her income among different goods in such a way that the marginal utility derived from the last unit of each good is equal.
- Equi-marginal utility is based on the cardinal approach as it involves the measurement of marginal utility in numerical terms.
- The concept of indifference curve, on the other hand, is based on the ordinal approach, which assumes that utility can only be ranked in order of preference, but not measured in numerical terms.
- The law of diminishing returns is a concept in economics that states that after a certain point, the marginal product of a factor of production decreases as the quantity of the factor increases, while holding other factors constant. This concept is related to production, not to utility.
- Therefore, the correct answer is (B) Equi-marginal utility.
Explanation:
- Cardinal approach is one of the approaches to measure utility in economics. It emphasizes the quantification of utility and assumes that it can be measured numerically.
- Equi-marginal utility is a concept in economics that assumes that a rational consumer allocates his/her income among different goods in such a way that the marginal utility derived from the last unit of each good is equal.
- Equi-marginal utility is based on the cardinal approach as it involves the measurement of marginal utility in numerical terms.
- The concept of indifference curve, on the other hand, is based on the ordinal approach, which assumes that utility can only be ranked in order of preference, but not measured in numerical terms.
- The law of diminishing returns is a concept in economics that states that after a certain point, the marginal product of a factor of production decreases as the quantity of the factor increases, while holding other factors constant. This concept is related to production, not to utility.
- Therefore, the correct answer is (B) Equi-marginal utility.
Suppose the price of movies seen at a theatre rises form Rs. 120 per person to Rs. 200 per person. The theatre manger observes that the rise in price leads to a fall in attendance at a given movie from 300 to 200 persons what is then price elasticity of demand for movies:- a)0.5
- b)0.8
- c)1
- d)1.2
Correct answer is option 'B'. Can you explain this answer?
Suppose the price of movies seen at a theatre rises form Rs. 120 per person to Rs. 200 per person. The theatre manger observes that the rise in price leads to a fall in attendance at a given movie from 300 to 200 persons what is then price elasticity of demand for movies:
a)
0.5
b)
0.8
c)
1
d)
1.2
|
Nandini Iyer answered |
Arc elasticity may be expressed as: [(Q1 - Q)/(Q1 + Q)] x [(P1 + P)/(P1 - P)]
Therefore,
[(300 - 200)/(300 + 200)] x [(200 + 120)/(200 - 120)]
= (100/500) x (320/80)
So, Arc elasticity = 4/5 = 0.8
(differences were large hence arc elasticity is used.)
Cross elasticity of demand in Monopoly market is: - a)Elastic
- b)Zero
- c)Infinite
- d)One
Correct answer is 'B'. Can you explain this answer?
Cross elasticity of demand in Monopoly market is:
a)
Elastic
b)
Zero
c)
Infinite
d)
One
|
|
Meera Joshi answered |
Cross elasticity of demand refers to the change in demand of a commodity due to change in price of substitutes. In case of monopoly, there are no substitutes of the product,hence the cross elasticity of demand is zero.
When supply price increase in the short run, the profit of the producer________:- a)Increases
- b)Decreases
- c)Remains constant
- d)Decreases marginally
Correct answer is option 'A'. Can you explain this answer?
When supply price increase in the short run, the profit of the producer________:
a)
Increases
b)
Decreases
c)
Remains constant
d)
Decreases marginally
|
Kavita Joshi answered |
Increases and decreases in supply and demand are represented by shifts to the left (decreases) or right (increases) of the demand or supply curve. ... Demand Increase: price increases, quantity increases. Demand Decrease: price decreases, quantity decreases. Supply Increase: price decreases, quantity increases.
Suppose the price of movies seen at a theatre rises from Rs. 120 per person to Rs. 200 per person. The theater manager observes that the rise in price is because attendance at a given movie is to fall from 300 persons to 200 persons. What is the price elasticity of demand for movies? (Use Arc Elasticity Method)
- a)0.1
- b)- 0.5
- c)0.7
- d)1.2
Correct answer is option 'B'. Can you explain this answer?
Suppose the price of movies seen at a theatre rises from Rs. 120 per person to Rs. 200 per person. The theater manager observes that the rise in price is because attendance at a given movie is to fall from 300 persons to 200 persons. What is the price elasticity of demand for movies? (Use Arc Elasticity Method)
a)
0.1
b)
- 0.5
c)
0.7
d)
1.2
|
|
Rishika Kumar answered |
Price elasticity of demand (PED) is calculated using the formula:
PED = % change in quantity demanded / % change in price
In this case, the % change in quantity demanded is calculated as:
% change in quantity demanded = (new quantity demanded - old quantity demanded) / old quantity demanded
% change in quantity demanded = (200 - 300) / 300 = -0.3333
The % change in price is calculated as:
% change in price = (new price - old price) / old price
% change in price = (200 - 120) / 120 = 0.6667
Now, we can substitute the values into the PED formula:
PED = -0.3333 / 0.6667
PED ≈ -0.5
The price elasticity of demand for movies is approximately -0.5.
PED = % change in quantity demanded / % change in price
In this case, the % change in quantity demanded is calculated as:
% change in quantity demanded = (new quantity demanded - old quantity demanded) / old quantity demanded
% change in quantity demanded = (200 - 300) / 300 = -0.3333
The % change in price is calculated as:
% change in price = (new price - old price) / old price
% change in price = (200 - 120) / 120 = 0.6667
Now, we can substitute the values into the PED formula:
PED = -0.3333 / 0.6667
PED ≈ -0.5
The price elasticity of demand for movies is approximately -0.5.
When price falls by 5% and demand increase by 6%, then elasticity of demand is______.- a)Elastic
- b)Inelastic
- c)Unitary elastic
- d)Zero.
Correct answer is option 'A'. Can you explain this answer?
When price falls by 5% and demand increase by 6%, then elasticity of demand is______.
a)
Elastic
b)
Inelastic
c)
Unitary elastic
d)
Zero.
|
|
Nikita Singh answered |
EOD =6/5
=1.2
Since EOD is greater than 1. So, it is elastic.
=1.2
Since EOD is greater than 1. So, it is elastic.
When change in the quantity supplied is proportionate to the change in the price, the producer is said to have ______:- a)Perfectly elastic supply
- b)Relatively elastic supply
- c)Unitary elastic supply
- d)Perfectly inelastic supply
Correct answer is option 'C'. Can you explain this answer?
When change in the quantity supplied is proportionate to the change in the price, the producer is said to have ______:
a)
Perfectly elastic supply
b)
Relatively elastic supply
c)
Unitary elastic supply
d)
Perfectly inelastic supply
|
Srsps answered |
The correct answer is (C) Unitary elastic supply.
Explanation:
Unitary Elastic Supply:
- Unitary elastic supply occurs when the percentage change in quantity supplied is equal to the percentage change in price.
- In this case, the price elasticity of supply (PES) is equal to 1.
- PES is calculated as the percentage change in quantity supplied divided by the percentage change in price.
- Unitary elastic supply reflects a situation where producers are able to adjust their production levels proportionately to the changes in price.
- This type of supply response is more likely to be observed in markets where producers have some flexibility in adjusting their production levels but are not able to do so instantaneously or without constraints.
- Unitary elastic supply occurs when the percentage change in quantity supplied is equal to the percentage change in price.
- In this case, the price elasticity of supply (PES) is equal to 1.
- PES is calculated as the percentage change in quantity supplied divided by the percentage change in price.
- Unitary elastic supply reflects a situation where producers are able to adjust their production levels proportionately to the changes in price.
- This type of supply response is more likely to be observed in markets where producers have some flexibility in adjusting their production levels but are not able to do so instantaneously or without constraints.
A demand curve parallel to the Y-axis implies:- a)Ep = 0
- b)Ep = 1
- c)Ep < 1
- d)Ep > 1
Correct answer is option 'C'. Can you explain this answer?
A demand curve parallel to the Y-axis implies:
a)
Ep = 0
b)
Ep = 1
c)
Ep < 1
d)
Ep > 1
|
|
Shanaya Dasgupta answered |
The horizontal demand curve parallel to x-axis implies that the elasticity of demand is infinite.It is zero when the demand curve is parallel to the y-axis.
When supply is perfectly inelastic, elasticity of supply is equal to:- a)+1
- b)0
- c).1
- d)Infinity
Correct answer is option 'B'. Can you explain this answer?
When supply is perfectly inelastic, elasticity of supply is equal to:
a)
+1
b)
0
c)
.1
d)
Infinity
|
|
Freedom Institute answered |
Correct answer is option B.
Explanation:
In this case, the elasticity of supply is equal to 0.
Perfectly Inelastic Supply:
- In the case of perfectly inelastic supply, the quantity supplied remains the same even when the price changes.
- This means that the percentage change in quantity supplied is 0, regardless of the percentage change in price.
Perfectly Inelastic Supply:
- In the case of perfectly inelastic supply, the quantity supplied remains the same even when the price changes.
- This means that the percentage change in quantity supplied is 0, regardless of the percentage change in price.
If a 20% fall in price brings about a 10% fall in quantity supplied, in such a case elasticity of supply will be equal to:- a)2.0
- b)0.5
- c)1.0
- d)1.5
Correct answer is option 'B'. Can you explain this answer?
If a 20% fall in price brings about a 10% fall in quantity supplied, in such a case elasticity of supply will be equal to:
a)
2.0
b)
0.5
c)
1.0
d)
1.5
|
|
Freedom Institute answered |
Correct answer is option B.
Explanation:
The elasticity of supply is a measure of how the quantity supplied of a good responds to a change in its price. It is calculated using the following formula:
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
In this case, we are given:
- A 20% fall in price (which is a -20% change in price)
- A 10% fall in quantity supplied (which is a -10% change in quantity supplied)
Now, we can plug these values into the formula:
Elasticity of Supply = (-10%) / (-20%)
Elasticity of Supply = 0.5
So, the elasticity of supply in this case is 0.5. This means that for every 1% decrease in price, the quantity supplied will decrease by 0.5%. This indicates that the supply is inelastic, as the percentage change in quantity supplied is less than the percentage change in price.
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
In this case, we are given:
- A 20% fall in price (which is a -20% change in price)
- A 10% fall in quantity supplied (which is a -10% change in quantity supplied)
Now, we can plug these values into the formula:
Elasticity of Supply = (-10%) / (-20%)
Elasticity of Supply = 0.5
So, the elasticity of supply in this case is 0.5. This means that for every 1% decrease in price, the quantity supplied will decrease by 0.5%. This indicates that the supply is inelastic, as the percentage change in quantity supplied is less than the percentage change in price.
Can you explain the answer of this question below:The price of hot-dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:
- A:
Elastic
- B:
Inelastic
- C:
Unitary elastic
- D:
Perfectly elastic
The answer is a.
The price of hot-dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:
Elastic
Inelastic
Unitary elastic
Perfectly elastic
|
Pragati Shah answered |
According to relatively elastic demand, an increase in price will lead to greater than proportionate change in quantity demanded. In this case price increases by 22% and quantity demanded falls by 25% which is greater than 22% (increase in price) so the ans is elastic.
Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?
- a)1.25
- b)1.00
- c)0.80
- d)None of the above.
Correct answer is option 'C'. Can you explain this answer?
Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?
a)
1.25
b)
1.00
c)
0.80
d)
None of the above.
|
|
Srsps answered |
Correct Answer :- C
Explanation : Q1 = 100 P1 = 125000
Q2 = 125 P2 = 100000
(Q2-Q1)/Q = P(P2-P1)
=> (25000/125000) * (100/25)
= 4/5
= 0.8
All but one of the following are assumed to remain the same while drawing an individual’s demand curve for a commodity. Which one is it?- a)The preference of the individual.
- b)His monetary income.
- c)Price.
- d)Price of related goods.
Correct answer is 'C'. Can you explain this answer?
All but one of the following are assumed to remain the same while drawing an individual’s demand curve for a commodity. Which one is it?
a)
The preference of the individual.
b)
His monetary income.
c)
Price.
d)
Price of related goods.
|
Arjun Singhania answered |
Only one i.e. price changes, all others like price of related goods, income, taste and preference remain constant, while drawing an individual’s Demand curve for a commodity
A consumer spends Rs. 80 on purchasing a commodity when its price is Re. 1 per unit and spends Rs. 96 when the price is Rs. 2 per unit. Calculate the price elasticity of demand. - a)0.2
- b)0.3
- c)0.4
- d)0.5
Correct answer is option 'C'. Can you explain this answer?
A consumer spends Rs. 80 on purchasing a commodity when its price is Re. 1 per unit and spends Rs. 96 when the price is Rs. 2 per unit. Calculate the price elasticity of demand.
a)
0.2
b)
0.3
c)
0.4
d)
0.5
|
|
Jayant Mishra answered |
Initial Total Expenditure (TEo)=Rs 80
Final Total Expenditure (TE1)=Rs 96
Initial Price (Po)=Rs 1
Final Price (P1)=Rs 2
Now, Quantity Q = TE/P
Qo = 80/1 = 80
Q1 = 96/2 = 48
Now,
Ed=(−)[Po/Qo] x [ΔQ/ΔP]
Ed=(−)1/80 x [48−80]/(2−1)
Ed=(−)1/80 x (−32/1)
Ed=(−)−0.4
Ed=0.4
Thus, the price elasticity of demand is 0.4.
An increase in the demand for computers and an increase in the number of sellers of computers will- a)increase the number of computers bought
- b)decrease the price but increase the number of computers bought
- c)increase the price of a computer
- d)increase the price and the number of computers bought
Correct answer is option 'D'. Can you explain this answer?
An increase in the demand for computers and an increase in the number of sellers of computers will
a)
increase the number of computers bought
b)
decrease the price but increase the number of computers bought
c)
increase the price of a computer
d)
increase the price and the number of computers bought
|
|
Poonam Reddy answered |
Correct Answer :- d
Explanation : An increase in demand for computers and increase in number of sellers of computers will decrease the number of computers bought. This is because the supply and demand have increased and the quantity demanded will also increase to achieve equilibrium.
A book “The Nature and significance of Economic Science” is written by:- a)Alfred Marshal
- b)Lionel Robbins
- c)Samuelson
- d)none
Correct answer is option 'B'. Can you explain this answer?
A book “The Nature and significance of Economic Science” is written by:
a)
Alfred Marshal
b)
Lionel Robbins
c)
Samuelson
d)
none
|
|
Poonam Reddy answered |
Book: "The Nature and significance of Economic Science"
Author: Lionel Robbins
Explanation:
- The book "The Nature and significance of Economic Science" is written by Lionel Robbins.
- Lionel Robbins was a renowned British economist and professor at the London School of Economics.
- In this book, Robbins discusses the fundamental principles and nature of economics as a science.
- The book explores the role of economics in understanding human behavior, resource allocation, and the functioning of markets.
- Robbins emphasizes the importance of economic analysis in making rational decisions and understanding the complexities of economic systems.
- The book is considered a classic work in the field of economics and has been influential in shaping economic thought.
- It provides a comprehensive overview of economic science and its significance in the modern world.
Conclusion:
The book "The Nature and significance of Economic Science" is written by Lionel Robbins, a prominent economist known for his contributions to the field of economics.
Author: Lionel Robbins
Explanation:
- The book "The Nature and significance of Economic Science" is written by Lionel Robbins.
- Lionel Robbins was a renowned British economist and professor at the London School of Economics.
- In this book, Robbins discusses the fundamental principles and nature of economics as a science.
- The book explores the role of economics in understanding human behavior, resource allocation, and the functioning of markets.
- Robbins emphasizes the importance of economic analysis in making rational decisions and understanding the complexities of economic systems.
- The book is considered a classic work in the field of economics and has been influential in shaping economic thought.
- It provides a comprehensive overview of economic science and its significance in the modern world.
Conclusion:
The book "The Nature and significance of Economic Science" is written by Lionel Robbins, a prominent economist known for his contributions to the field of economics.
Which economist said that money is the measuring rod of utility?- a)A.C Pigou
- b)Marshall
- c)Adam Smith
- d)Robbins
Correct answer is option 'A'. Can you explain this answer?
Which economist said that money is the measuring rod of utility?
a)
A.C Pigou
b)
Marshall
c)
Adam Smith
d)
Robbins
|
|
Arjun Singhania answered |
According to Pigou, welfare resides in a man’s state of mind or consciousness which is made up of his satisfactions or utilities. The basis of welfare, therefore, is necessarily the extent to which an individual’s desires are met. Social welfare is regarded as the summation of all individual welfares in a society. Since general welfare is a very wide, complicated and impracticable notion, Pigou delimits the range of his study to economic welfare. As he himself observes, economic welfare is by no means an index of total welfare because many other elements in the latter, like the quality of work, one’s environment, human relationships, status, housing, and public security are absent from economic welfare.
He, therefore, defines economic welfare as “that part of social (general) welfare that can be brought directly or indirectly into relation with the measuring rod of money.” Thus economic welfare, in the Pigovian sense, implies the satisfaction of utility derived by an individual from the use of exchangeable goods and services.
The demand of which type of goods do not decrease with increase in its price- a)Comforts
- b)Luxury
- c)Necessities
- d)Capital goods
Correct answer is option 'C'. Can you explain this answer?
The demand of which type of goods do not decrease with increase in its price
a)
Comforts
b)
Luxury
c)
Necessities
d)
Capital goods
|
|
Ankita Mukherjee answered |
An increase or decrease in the price of such a good does not affect its quantity demanded. These goods have a perfectly inelastic relationship, in that any change in price does not change the quantity demanded.
In case of an inferior good, the income elasticity of demand is: - a)Positive
- b)Zero
- c)Negative
- d)Infinite
Correct answer is option 'C'. Can you explain this answer?
In case of an inferior good, the income elasticity of demand is:
a)
Positive
b)
Zero
c)
Negative
d)
Infinite
|
|
Simran Pillai answered |
In the case of an inferior good, the income elasticity of demand is Negative. A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
What is income elasticity of demand, when income changes by 20% and demand changes by 40%- a)1/2
- b)2
- c)0.33
- d)None
Correct answer is 'B'. Can you explain this answer?
What is income elasticity of demand, when income changes by 20% and demand changes by 40%
a)
1/2
b)
2
c)
0.33
d)
None
|
|
Rajeev Chaudhary answered |
Ed=%change in demand\%change in price
Ed= 40%/20%
Ed= 2%
If the price is decreased form Rs. 10 to Rs. 8 of a commodity but the quantity demanded remains the same price elasticity is _________.- a)1
- b)0
- c)?
- d)None
Correct answer is option 'B'. Can you explain this answer?
If the price is decreased form Rs. 10 to Rs. 8 of a commodity but the quantity demanded remains the same price elasticity is _________.
a)
1
b)
0
c)
?
d)
None
|
Bhaskar Sharma answered |
When the price elasticity of demand for a good is perfectly inelastic (Ed =0), changes in the price do not affect the quantity demanded for the good; and hence option B is the correct answer.
Consumer Surplus is based on which concept?- a)Diminishing Marginal Utility
- b)Law of Demand
- c)Indifference curve Approach
- d)None
Correct answer is option 'A'. Can you explain this answer?
Consumer Surplus is based on which concept?
a)
Diminishing Marginal Utility
b)
Law of Demand
c)
Indifference curve Approach
d)
None
|
|
Akshay Saini answered |
Consumer surplus is based on the economic theory of marginal utility, which is the additional satisfaction a consumer gains from one more unit of a good or service.
Giffen paradox is an exception of - a)Demand
- b)Supply
- c)Production
- d)Utility
Correct answer is option 'A'. Can you explain this answer?
Giffen paradox is an exception of
a)
Demand
b)
Supply
c)
Production
d)
Utility
|
|
Arun Khanna answered |
In economics and consumer theory, a Giffen good is a product that people consume more of as the price rises and vice versa—violating the basic law of demand in microeconomics. According to the Law of Demand, when the price of a commodity falls the demand for it rises. Giffen's Paradox is an exception to this law.
If there is an improvement in the technology, ___________:- a)The supply curve shifts to the left
- b)The supply curve shifts to the right
- c)Quantity supplied increase
- d)Both (b) and (c)
Correct answer is option 'B'. Can you explain this answer?
If there is an improvement in the technology, ___________:
a)
The supply curve shifts to the left
b)
The supply curve shifts to the right
c)
Quantity supplied increase
d)
Both (b) and (c)
|
Aman Chaudhary answered |
Impact of Technology Improvement on Supply Curve
Introduction:
Technology plays a crucial role in the production process of goods and services. Technological advancements can lead to a change in the supply of goods and services in the market.
Supply Curve:
The supply curve is a graphical representation of the relationship between the price of a product and the quantity of the product that suppliers are willing to sell. A change in any factor other than the price of the product can shift the supply curve.
Impact on Technology Improvement on Supply Curve:
When there is an improvement in technology, the supply curve shifts to the right. The following points explain the impact of technology improvement on the supply curve:
Conclusion:
In conclusion, when there is an improvement in technology, the supply curve shifts to the right. This shift in the supply curve leads to an increase in the quantity of the product that suppliers are willing to sell.
Introduction:
Technology plays a crucial role in the production process of goods and services. Technological advancements can lead to a change in the supply of goods and services in the market.
Supply Curve:
The supply curve is a graphical representation of the relationship between the price of a product and the quantity of the product that suppliers are willing to sell. A change in any factor other than the price of the product can shift the supply curve.
Impact on Technology Improvement on Supply Curve:
When there is an improvement in technology, the supply curve shifts to the right. The following points explain the impact of technology improvement on the supply curve:
- Increased Productivity: Technological advancements can lead to an increase in productivity, which means that the same amount of resources can produce more output. This increase in productivity leads to an increase in the quantity of the product that suppliers are willing to sell.
- Lower Production Costs: Technology can also lead to lower production costs, which means that suppliers can produce the same amount of output at a lower cost. This decrease in production costs leads to an increase in the quantity of the product that suppliers are willing to sell.
- New Products: Technological advancements can also lead to the development of new products, which can increase the supply of goods and services in the market.
- Increased Efficiency: Technology can lead to increased efficiency in the production process, which can lead to an increase in the quantity of the product that suppliers are willing to sell.
Conclusion:
In conclusion, when there is an improvement in technology, the supply curve shifts to the right. This shift in the supply curve leads to an increase in the quantity of the product that suppliers are willing to sell.
Compute income elasticity if demand increases by 5% and income by 1%.- a)5
- b)1/5
- c)0
- d)None
Correct answer is option 'A'. Can you explain this answer?
Compute income elasticity if demand increases by 5% and income by 1%.
a)
5
b)
1/5
c)
0
d)
None
|
|
Rajat Patel answered |
A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.
Can you explain the answer of this question below:The cross elasticity of demand between two perfect substitutes will be
- A:
Zero
- B:
Infinity
- C:
Very high
- D:
Very low
The answer is b.
The cross elasticity of demand between two perfect substitutes will be
Zero
Infinity
Very high
Very low
|
|
Priya Patel answered |
In cases of perfect substitute goods cross elasticity is positive and very high. It means when the price of the substitute goods falls, the demand of the commodity also falls or vice versa. Therefore, substitute goods have very high perfect cross elasticity of demand.
Demand for a commodity refers to:
- a)Need for the commodity
- b)Desire for the commodity
- c)Amount of the commodity demanded during a particular price and particular time
- d)Quantity demanded of that commodity
Correct answer is option 'C'. Can you explain this answer?
Demand for a commodity refers to:
a)
Need for the commodity
b)
Desire for the commodity
c)
Amount of the commodity demanded during a particular price and particular time
d)
Quantity demanded of that commodity
|
|
Vaishnavi Gupta answered |
Demand for a commodity refers to a quantity of the commodity demanded at a certain price during any particular period of time.
In case of a straight line demand curve meeting the two axes, the price elasticity of demand at the mid-point of the line would be:- a)0
- b)1
- c)1.5
- d)2
Correct answer is 'B'. Can you explain this answer?
In case of a straight line demand curve meeting the two axes, the price elasticity of demand at the mid-point of the line would be:
a)
0
b)
1
c)
1.5
d)
2
|
|
Arun Khanna answered |
A demand curve:
We plot quantity demanded against price.
Since it is a straight line in this scenario, the demand is directly proportional to demand.
Meaning at P = 1 Q = 1
Elasticity = P / Q
The answer is thus 1
What is Engel’s Curve?- a)Curve showing three demand curve
- b)Named after Ernst Engel
- c)Both (a) and (b)
- d)None
Correct answer is option 'C'. Can you explain this answer?
What is Engel’s Curve?
a)
Curve showing three demand curve
b)
Named after Ernst Engel
c)
Both (a) and (b)
d)
None
|
|
Nandini Iyer answered |
Engel curve describes how household expenditure on a particular good or service varies with household income. There are two varieties of Engel curves. Budget share Engel curves describe how the proportion of household income spent on a good varies with income .
Engel curve describes how household expenditure on a particular good or service varies with household income.There are two varieties of Engel curves. Budget share Engel curves describe how the proportion of household income spent on a good varies with income. Alternatively, Engel curves can also describe how real expenditure varies with household income. They are named after the German statistician Ernst Engel (1821–1896), who was the first to investigate this relationship between goods expenditure and income systematically in 1857. The best-known single result from the article is Engel's law which states that the poorer a family is, the larger the budget share it spends on nourishment.
What is the value of elasticity of demand if the demand for the good is perfectly elastic?- a)0
- b)1
- c)Infinity
- d)Less than 0
Correct answer is 'C'. Can you explain this answer?
What is the value of elasticity of demand if the demand for the good is perfectly elastic?
a)
0
b)
1
c)
Infinity
d)
Less than 0
|
|
Arun Khanna answered |
When demand is perfectly inelastic, quantity demanded for a good does not change in response to a change in price. Finally, demand is said to be perfectly elastic when the PED coefficient is equal to infinity. When demand is perfectly elastic, buyers will only buy at one price and no other.
Demand for electricity power is elastic because_______- a)It is available at a very high price
- b)It is essential for life
- c)It has many uses
- d)It has many substitutes
Correct answer is option 'C'. Can you explain this answer?
Demand for electricity power is elastic because_______
a)
It is available at a very high price
b)
It is essential for life
c)
It has many uses
d)
It has many substitutes
|
|
Niharika Datta answered |
Explanation:
Electricity power is considered to be an elastic demand because of the following reasons:
1. Many Uses: Electricity power is widely used for different purposes like lighting, heating, cooking, running appliances, etc. This means that there are many uses for electricity power, and consumers have a variety of options to choose from.
2. Substitutes: Consumers have the freedom to switch from one source of electricity power to another, depending on their needs and preferences. For example, they can switch from using electricity to using gas or oil for heating their homes.
3. Price Sensitivity: Consumers are sensitive to changes in the price of electricity power. If the price of electricity power increases beyond a certain level, they may reduce their consumption or switch to alternative sources of energy.
4. Essentiality: Although electricity power is essential for life, it is not the only source of energy that can be used to meet basic needs like lighting, heating, and cooking. As a result, consumers have the freedom to choose from a variety of energy sources that can meet their basic needs.
Electricity power is considered to be an elastic demand because of the following reasons:
1. Many Uses: Electricity power is widely used for different purposes like lighting, heating, cooking, running appliances, etc. This means that there are many uses for electricity power, and consumers have a variety of options to choose from.
2. Substitutes: Consumers have the freedom to switch from one source of electricity power to another, depending on their needs and preferences. For example, they can switch from using electricity to using gas or oil for heating their homes.
3. Price Sensitivity: Consumers are sensitive to changes in the price of electricity power. If the price of electricity power increases beyond a certain level, they may reduce their consumption or switch to alternative sources of energy.
4. Essentiality: Although electricity power is essential for life, it is not the only source of energy that can be used to meet basic needs like lighting, heating, and cooking. As a result, consumers have the freedom to choose from a variety of energy sources that can meet their basic needs.
For a commodity with a unitary elastic demand curve if the price of the commodity raises, then the consumer’s total expenditure on this commodity would: - a)Increase
- b)Decrease
- c)Remains constant
- d)Either increase or decrease
Correct answer is option 'C'. Can you explain this answer?
For a commodity with a unitary elastic demand curve if the price of the commodity raises, then the consumer’s total expenditure on this commodity would:
a)
Increase
b)
Decrease
c)
Remains constant
d)
Either increase or decrease
|
|
Kavita Joshi answered |
When the demand is unitary elastic, an increase or decrease in price of good will have no effect on total expenditure. So the total expenditure of consumer will remain same with an increase in price.
The price of hot-dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is: - a)Elastic
- b)Inelastic
- c)Unitary elastic
- d)Perfectly elastic
Correct answer is option 'A'. Can you explain this answer?
The price of hot-dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:
a)
Elastic
b)
Inelastic
c)
Unitary elastic
d)
Perfectly elastic
|
|
Srsps answered |
Demand for a good is elastic when the percentage change in quantity demanded is more than the percentage change in price. Price of hot dogs increase by 22% and demand falls by 25% hence, demand for hot dogs is elastic.
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______- a)Zero.
- b)Greater than one
- c)Less than one
- d)Infinity
Correct answer is option 'D'. Can you explain this answer?
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______
a)
Zero.
b)
Greater than one
c)
Less than one
d)
Infinity
|
|
Priya Patel answered |
The slope of a straight-line demand curve, one with a constant slope, has constantly changing elasticity. ... No two points on a straight-line demand curve have the same elasticity. The price elasticity of demand is different at each point on a demand curve with constant slope.
In the book market, the supply of books will decrease if any of the following occurs except- a)a decrease in the number of book publishers
- b)a decrease in the price of the book
- c)an increase in the future expected price of the book
- d)an increase in the price of paper used
Correct answer is option 'B'. Can you explain this answer?
In the book market, the supply of books will decrease if any of the following occurs except
a)
a decrease in the number of book publishers
b)
a decrease in the price of the book
c)
an increase in the future expected price of the book
d)
an increase in the price of paper used
|
|
Maheshwar Datta answered |
Factors affecting the supply of books
The supply of books in the market is determined by several factors. Let us discuss each of these factors in detail.
1. Number of book publishers
Book publishers are the primary source of books in the market. The more the number of publishers, the higher the supply of books. The publishers are responsible for producing and distributing books to the market. Therefore, a decrease in the number of book publishers will result in a decrease in the supply of books.
2. Price of the book
The price of the book is an important factor that affects the supply of books. If the price of the book increases, the supply of books will increase because publishers will be motivated to produce more books to take advantage of the higher price. On the other hand, if the price of the book decreases, the supply of books will decrease because publishers will be less willing to produce books at a lower price.
3. Future expected price of the book
The future expected price of the book also affects the supply of books. If publishers expect the price of the book to increase in the future, they will produce more books to take advantage of the higher price. On the other hand, if publishers expect the price of the book to decrease in the future, they will produce fewer books to avoid losses.
4. Price of paper used
The price of paper used in the production of books is another factor that affects the supply of books. If the price of paper increases, the supply of books will decrease because publishers will have to spend more on production costs. This will result in a decrease in the profit margin for publishers, and they will be less willing to produce books at a lower profit margin.
Answer
The correct answer is b) a decrease in the price of the book. All the other options will affect the supply of books in the market, but a decrease in the price of the book will not affect the supply of books. If the price of the book decreases, publishers may produce fewer books to avoid losses, but it will not affect the overall supply of books in the market.
The supply of books in the market is determined by several factors. Let us discuss each of these factors in detail.
1. Number of book publishers
Book publishers are the primary source of books in the market. The more the number of publishers, the higher the supply of books. The publishers are responsible for producing and distributing books to the market. Therefore, a decrease in the number of book publishers will result in a decrease in the supply of books.
2. Price of the book
The price of the book is an important factor that affects the supply of books. If the price of the book increases, the supply of books will increase because publishers will be motivated to produce more books to take advantage of the higher price. On the other hand, if the price of the book decreases, the supply of books will decrease because publishers will be less willing to produce books at a lower price.
3. Future expected price of the book
The future expected price of the book also affects the supply of books. If publishers expect the price of the book to increase in the future, they will produce more books to take advantage of the higher price. On the other hand, if publishers expect the price of the book to decrease in the future, they will produce fewer books to avoid losses.
4. Price of paper used
The price of paper used in the production of books is another factor that affects the supply of books. If the price of paper increases, the supply of books will decrease because publishers will have to spend more on production costs. This will result in a decrease in the profit margin for publishers, and they will be less willing to produce books at a lower profit margin.
Answer
The correct answer is b) a decrease in the price of the book. All the other options will affect the supply of books in the market, but a decrease in the price of the book will not affect the supply of books. If the price of the book decreases, publishers may produce fewer books to avoid losses, but it will not affect the overall supply of books in the market.
A change in the supply of a commodity along with same supply curve may occur due to: - a)Change in the price of the commodity
- b)Change in the prices of related goods
- c)Change in the future, expectations about the price of the good
- d)Change in the cost of inputs
Correct answer is option 'A'. Can you explain this answer?
A change in the supply of a commodity along with same supply curve may occur due to:
a)
Change in the price of the commodity
b)
Change in the prices of related goods
c)
Change in the future, expectations about the price of the good
d)
Change in the cost of inputs
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Srsps answered |
Correct answer is option A.
Explanation:
A change in the supply of a commodity along the same supply curve may occur due to a change in the price of the commodity. Let's discuss this in detail:
Change in the price of the commodity:
- When the price of a commodity changes, it leads to a change in the quantity supplied of that commodity. This change in the quantity supplied happens along the same supply curve.
- The supply curve shows the relationship between the price of a commodity and the quantity supplied, assuming all other factors remain constant.
- If the price of the commodity increases, the quantity supplied will also increase, as producers are motivated to produce and supply more of the commodity at a higher price to earn more revenue. This movement is called an extension of supply and happens along the same supply curve.
- Conversely, if the price of the commodity decreases, the quantity supplied will decrease, as producers are less motivated to produce and supply the commodity at a lower price. This movement is called a contraction of supply and also occurs along the same supply curve.
Change in the price of the commodity:
- When the price of a commodity changes, it leads to a change in the quantity supplied of that commodity. This change in the quantity supplied happens along the same supply curve.
- The supply curve shows the relationship between the price of a commodity and the quantity supplied, assuming all other factors remain constant.
- If the price of the commodity increases, the quantity supplied will also increase, as producers are motivated to produce and supply more of the commodity at a higher price to earn more revenue. This movement is called an extension of supply and happens along the same supply curve.
- Conversely, if the price of the commodity decreases, the quantity supplied will decrease, as producers are less motivated to produce and supply the commodity at a lower price. This movement is called a contraction of supply and also occurs along the same supply curve.
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Business Economics for CA Foundation
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