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Theory Of Consumer Behaviour

Question

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Due to 10% fall in price of a commodity, its quantity demanded rises from 400 units to 450 units. Calculate its price elasticity of demand.

Solution

Percent rise in quantity demanded
$equals fraction numerator 50 cross times 100 over denominator 400 end fraction equals 25 over 2 equals 12.5 % eD space equals space fraction numerator % space Change space in space demand over denominator % space Change space in space price end fraction equals fraction numerator 12.5 over denominator 10 end fraction equals 1.25$

Some More Questions From Theory Of Consumer Behaviour Chapter

Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

Give meaning of demand.

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?

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