04. Firms A and B uses different combinations of inputs (Steel and Leather) to produce an output. The output is priced at Rs. 100 and Rs. 200 for sector A and B respectively. The input combination is given below. Firms A B Steel 15 05 Leather 20 20 Final Demand 45 15 Total ? 2 When the price fall to Rs 80 and Rs. 150, there is a change in final demand i.e. 65 and 25 respectively. Find out the required output to meet the increase in demand. Also write in details the relationship between demand and price and represent the relationship with the help of a demand curve. Hint: it can be positive or negative relation.
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Answer:
no negative realation
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The output needed are 20 and 10.
There is no negative relation.
In the picture :-
Price is set on vertical axis (x) while value is set on horizontal axis (y).
Demand curve is the relation between price and demand.
It will follow the law of demand which is " whe n the price of the product increases the demand decreases, and when the price of the product decreases the demand increases ".
Both price and price range decreases.
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