One Word AnswersWhen price of a commodity X falls by 10 per cent, its demand rises from 150 units to 180 units. Calculate its price elasticity of demand. How much should be the percentage fall in its price so that its demand rises from 150 to 210 units ?
Given that
Percentage fall in price = 10
Initial demand = 150
New demand = 180
% Increase in demand = 30 × 100 = 20%
150
As we know that
ed= % Change in demand = -20 = -2
% Change in price 10
if demand increase from 150 to 210
% Change in demand = 60 × 100 = 40%
150
% Change in price = % Change in demand = 40 = -20
ed 2
Hence, the price will fall by 20% if the demand will increase from 150 to 210.
Complete the following table :
| output units | total cost | average variable cost | marginal cost | average fixed cost |
| 0 | 30 | |||
| 1 | 20 | |||
| 2 | 68 | |||
| 3 | 84 | 18 | ||
| 4 | 18 | |||
| 5 | 125 | 19 | 6 |
Short Answer TypeThe demand of a commodity when measured through the expenditure approach is inelastic. A fall in its price will result in :
(choose the correct alternative)
(a) no change in expenditure on it.
(b) increase in expenditure on it.
(c) decrease in expenditure on it.
(d) any one of the above
As we move along a downward sloping straight line demand curve from left to right, price elasticity of demand : (choose the correct alternative)
(a) remains unchanged
(b) goes on falling
(c) goes on rising
(d) falls initially then rises
Average revenue and price are always equal under : (choose the correct alternative)
(a) perfect competition only
(b) monopolistic competition only
(c) monopoly only
(d) all market forms
Show that demand of a commodity is inversely related to its price.
Explain with the help of utility analysis.
Or
Why is an indifference curve negatively sloped? Explain.
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