Advertisements
Advertisements
प्रश्न
Explain the effect of the following on the price elasticity of demand of a commodity:
(i) Number of substitutes
(ii) Nature of the commodity
उत्तर
(i) Number of Substitutes- The demand for a good having greater number of substitute goods will be relatively more elastic (or |ed| < 1). This is because a slight increase in the price will push the consumers to shift their demand away from the good to its substitutes and vice-versa. This implies that demand for the goods having a large number of substitutes is highly responsive to the changes in the price. Therefore, such goods have elastic demand. On the contrary, if a good has no close substitutes, then the demand will be inelastic.
(ii) Nature of the Commodity- The price elasticity of demand depends on the nature of a commodity. The goods and services can be broadly divided into three categories- Necessities, Luxuries and Jointly-demanded goods.
a. Necessity Goods- These goods are those goods which a consumer demands for sustaining his life. Hence, such goods have an inelastic demand (|ed| < 1).
b. Luxury Goods- Luxuries are the goods which are not essential, rather, are consumed f or leisure or comfort purposes. Thus, such goods have high price elasticity (|ed| > 1).
c. Jointly-demanded Goods- Jointly-demanded goods are those goods that are demanded together. Such goods have an inelastic demand (|ed| < 1).
APPEARS IN
संबंधित प्रश्न
Explain any two factors that affect the price elasticity of demand. Give suitable examples.
How does change in the price of complementary good affect the demand for the given good? Explain with the help of an example.
When price of a commodity falls by Rs 1 per unit, its quantity demanded rises by 3 units. Its price elasticity of demand is (−) 2. Calculate its quantity demanded if the price before the change was Rs 10 per unit.
Match the following :
| Group 'A' | Group 'B' |
| (a) Demand and price | (1) wages |
| (b) Perfectly elastic supply | (2) Vertical supply curve |
| (c) Land | (3) Transfer income |
| (d) Unemployment allowance | (4) Horizontal supply curve |
| (e) Reserve Bank of India | (5) Inverse relation |
| (6) Rent | |
| (7) 1935 | |
| (8) Direct relation |
State whether the following statement is true or false :
Concept of ‘elasticity of demand’ is useful for the finance minister.
Write Short note on the following.
Ratio method of measuring price elasticity of demand ?
Choose the correct answer :
The account in which the specific amount is deposited per month regularly is known as _________.
Match the following:
|
Group A
|
Group B
|
|
1. Cars and petrol
|
a. Elastic demand
|
|
2. Point method
|
b. Complementary
|
|
3. Necessary goods
|
c. Geometric method
|
|
|
d. Inelastic demand
|
The government wants to reduce the consumption of good by 10%. The price elasticity of demand for elasticity is -0.4. The government should raise the price of elasticity by ______.
What is the implication of a vertical demand curve?
When the price elasticity of demand for a good equals ______.
Which of the following is the most likely reason for the relatively high elasticity of bottled water?
Assertion (A): Demand for a commodity with large number of substitutes with be less elastic.
Reason (R): With large number of substitutes, even a small rise in its price will induce the buyers to go for its substitutes.
Explain briefly the factors on which elasticity of demand depends.
Comment upon the shape of the demand curve, if Ed = 0.
