Question

When price of a good rises from र 7 to र 8 per unit, its demand falls from 30 units to 20 units. Compare expenditure on the good to determine whether demand is elastic or inelastic.

Solution

Solution not provided.

Tips: -

Hint. Total expenditure before price change = 30 × 7 = 210
Total expenditure after price change = 20 × 8 = 160
Since rise in price reduces total expenditure, therefore, e_D is more than 1.

Some More Questions From Theory Of Consumer Behaviour Chapter

Name two determinants of demand.

List the factors that cause changes in demand.

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Theory Of Consumer Behaviour

When price of a good rises from र 7 to र 8 per unit, its demand falls from 30 units to 20 units. Compare expenditure on the good to determine whether demand is elastic or inelastic.

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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