CA Foundation Exam > CA Foundation Questions > Directions:In Econoville, there is one grocer...
Start Learning for Free
Directions: In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:
Only 200 litres of milk was sold every month.
The number of boxes of cereal customers bought went down from 280 to 240.
The number of packets of powered milk customers bought went up from 90 to 220 per month.
The number of boxes of cereal customers bought went down from 280 to 240.
The number of packets of powered milk customers bought went up from 90 to 220 per month.
The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal to
- a)+ 1.05
- b)- 1.05
- c)- 2.09
- d)+ 2.09
Correct answer is option 'D'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Directions:In Econoville, there is one grocery shop, Ecoconvenience. I...
Cross Elasticity of Demand Calculation
The cross elasticity of demand measures the responsiveness of demand for one good to changes in the price of another good. It is calculated using the following formula:
Cross Elasticity of Demand = (% Change in Quantity Demanded of Good A) / (% Change in Price of Good B)
Here, we need to calculate the cross elasticity of demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre.
Step 1: Calculate the percentage change in the quantity demanded of powdered milk.
Initial Quantity Demanded of Powdered Milk = 90 packets
New Quantity Demanded of Powdered Milk = 220 packets
% Change in Quantity Demanded of Powdered Milk = ((New Quantity Demanded - Initial Quantity Demanded) / Initial Quantity Demanded) x 100
% Change in Quantity Demanded of Powdered Milk = ((220 - 90) / 90) x 100
% Change in Quantity Demanded of Powdered Milk = 144.44%
Step 2: Calculate the percentage change in the price of fresh milk.
Initial Price of Fresh Milk = Rs. 20 per litre
New Price of Fresh Milk = Rs. 30 per litre
% Change in Price of Fresh Milk = ((New Price - Initial Price) / Initial Price) x 100
% Change in Price of Fresh Milk = ((30 - 20) / 20) x 100
% Change in Price of Fresh Milk = 50%
Step 3: Calculate the cross elasticity of demand.
Cross Elasticity of Demand = (% Change in Quantity Demanded of Powdered Milk) / (% Change in Price of Fresh Milk)
Cross Elasticity of Demand = (144.44% / 50%)
Cross Elasticity of Demand = 2.89
Since the cross elasticity of demand is positive, we can conclude that powdered milk is a substitute for fresh milk. The correct answer is option 'D' (2.09), which may be a typo in the question.
The cross elasticity of demand measures the responsiveness of demand for one good to changes in the price of another good. It is calculated using the following formula:
Cross Elasticity of Demand = (% Change in Quantity Demanded of Good A) / (% Change in Price of Good B)
Here, we need to calculate the cross elasticity of demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre.
Step 1: Calculate the percentage change in the quantity demanded of powdered milk.
Initial Quantity Demanded of Powdered Milk = 90 packets
New Quantity Demanded of Powdered Milk = 220 packets
% Change in Quantity Demanded of Powdered Milk = ((New Quantity Demanded - Initial Quantity Demanded) / Initial Quantity Demanded) x 100
% Change in Quantity Demanded of Powdered Milk = ((220 - 90) / 90) x 100
% Change in Quantity Demanded of Powdered Milk = 144.44%
Step 2: Calculate the percentage change in the price of fresh milk.
Initial Price of Fresh Milk = Rs. 20 per litre
New Price of Fresh Milk = Rs. 30 per litre
% Change in Price of Fresh Milk = ((New Price - Initial Price) / Initial Price) x 100
% Change in Price of Fresh Milk = ((30 - 20) / 20) x 100
% Change in Price of Fresh Milk = 50%
Step 3: Calculate the cross elasticity of demand.
Cross Elasticity of Demand = (% Change in Quantity Demanded of Powdered Milk) / (% Change in Price of Fresh Milk)
Cross Elasticity of Demand = (144.44% / 50%)
Cross Elasticity of Demand = 2.89
Since the cross elasticity of demand is positive, we can conclude that powdered milk is a substitute for fresh milk. The correct answer is option 'D' (2.09), which may be a typo in the question.
Free Test
FREE
| Start Free Test |
Community Answer
Directions:In Econoville, there is one grocery shop, Ecoconvenience. I...
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer?
Question Description
Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer?.
Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer?.
Solutions for Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer?, a detailed solution for Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Directions:In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs. 30 per litre. Following the price rise:Only 200 litres of milk was sold every month.The number of boxes of cereal customers bought went down from 280 to 240.The number of packets of powered milk customers bought went up from 90 to 220 per month.The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs. 20 to Rs. 30 per litre is equal toa)+ 1.05b)- 1.05c)- 2.09d)+ 2.09Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup