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Question
Identify & explain the concept from the given illustration.
At Amulya Café, the demand for tea increased by 5% due to a 10% rise in the price of coffee.
Solution
Concept: Cross elasticity of demand
Explanation:
- Cross elasticity refers to a change in quantity demanded of one commodity due to a change in the price of other commodity.
- At Amulya Café, a 10% rise in the price of coffee resulted in increase in the quantity demanded of tea by 5% as tea and coffee are substitute goods. Hence, this illustration is related to the concept of ‘cross elasticity of demand.’
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Read the extract given below and answer the questions.
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The Economic Times - 2024 “Lakshadweep becomes new keyword for investors. Praveg caught shareholder’s attention as it had last month received a work order for the development of operation, maintenance and management of atleast 50 tents at Lakshadweep’s island. The resorts will also offer commercial activities like scuba diving, destination weddings, corporate functions etc. Small cap soars 43% in 3 days. It is known for its luxury resorts in tourist places. During the day the stock rallied 17% to hit an all time high of Rs. 1,187.95" |
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- State the quality of a factor of production highlighted above.
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