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Theory Of Consumer Behaviour

Question

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Price elasticity of demand of a commodity is - 2.5. Price of commodity increased by 20 percent. What will be the change in quantity demanded?

Decrease by 50 units

Increase by 50 units

Decrease by 8 percent

Decrease by 50 percent

Solution

A.

Decrease by 50 units

Change in quantity demanded = - (2.5 x 20) = -50.

Some More Questions From Theory Of Consumer Behaviour Chapter

Name two determinants of demand.

List the factors that cause changes in demand.

What is law of demand?

What is demand schedule?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

What is meant by one good being substitute of other?

What is meant by one good being complementary to another.

Give an example of a pair of commodities that are substitutes of each other.

Give an example of a pair of commodities such that one of them is complementary in consumption to the other.

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