Question

20. When price of a good is Rs. 7 per unit a consumer buys 12 units. When price falls to Rs. 6 per unit he spends Rs. 72 on the good. Calculate price elasticity of demand by using the percentage method. comment on the likely shape of demand curve based on this measure of elasticity. 21. A consumer buys 10 units of a good at a price of Rs. 9 per unit. At price of Rs. 10 per unit he buys 9 units. What is price elasticity of demand? Use expenditure approach Comment on the likely shape of demand curve on the basis of this measure of elasticity. 22. A consumer buys 20 units of a good at a price of Rs. 5 per unit. He in incurs an expenditure of Rs. 120 when he buys 24 units. Calculate price elasticity of demand of the percentage method. Comment on the likely shape of demand curve based on this information. 23. When the price of a commodity falls by Rs. 2 per unit, its quantity demanded increases by 10 units. Its price elasticity of demand is (–) 1. Calculate its quantity demanded at the price before change which was Rs. 10 per unit. 24. The price elasticity of demand of a commodity is –0.5. At a price of Rs. 20 per unit, total expenditure on it is Rs. 2,000. Its price Its price is reduced by 10 percent. Calculate its demand at the reduced price. 25. State four determinants of price elasticity of demand. 27. Differentiate between : (i) Normal goods and Inferior goods (ii) Complementary goods and substitute goods. 28. Why should the budget line be tangent to the indifference curve at the point of consumer’s equilibrium. 29. Why does consumer stop consumption in case where marginal utility is less than price of a good? 30. What is budget line? Why is it negatively sloped? 31. A consumer consumes only two goods x & y. state & explain the conditions of consumer’s equilibrium with the help of utility analysis. 32. Explain the conditions determining how many units of a good the consumer will buy at a given price. 33. Define marginal rate of substitution. Explain why is an indifference curve convex?

Answer 1

Answer:

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