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Question
What do you mean by an ‘inferior good’? Give some examples.
Solution
Inferior good: Those goods that share an inverse relationship with their prices and with the income of a consumer are called inferior goods. That is,
If the price of a good (Px) increases, then thedemand for good (Dx) decreases.
If a consumer’s income (M) increases, then the demand for good (Dx) decreases.
Examples: Coarse cereals, bidis etc.
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RELATED QUESTIONS
As we move along a downward sloping straight line demand curve from left to right, price
an elasticity of demand : (choose the correct alternative)
(a) remains unchanged
(b) goes on falling
(c) goes on rising
(d) falls initially then rises
When the price of a commodity X falls by 10 percent. Its demand rises from 150 units to 180
units. Calculate is price elasticity of demand. How much should be the percentage fall in its
price so that its demand rises from 150 to 210 units?
When the price of good rises from Rs10 to Rs12 per unit, its demand falls from 25 units to 20 units. What can you say about price elasticity of demand of the good through the 'expenditure approach'?
A consumer spends Rs 400 on a good priced at Rs 4 per unit. When the price rises by 25 percent, the consumer continues to spend Rs 400. Calculate the price elasticity of demand by percentage method.
A consumer buys 10 units of a commodity at a price of Rs. 10 per unit. He incurs an expenditure of Rs 200 on buying 20 units. Calculate price elasticity of demand by the percentage method. Comment upon the shape of demand curve based on this information.
8 units of a good are demanded at a price of Rs 7 per unit. Price elasticity of demand is (−) 1. How many units will be demanded if the price rises to Rs 8 per unit? Use expenditure approach of price elasticity of demand to answer this question.
State whether the following statement isTrue or False with reason:
The concept of elasticity of demand is useful in economic theory.
Give reasons or explain the following statements
Demand for basic necessities is inelastic.
What do you mean by complements? Give examples of two goods which are complements of each other.
Give reason or explain the following statement.
All desires are not demand.
Give reason or explain the following statement:
Demand for habitual goods is inelastic.
Write short answer for the following question :
Total outlay method of measuring price elasticity of demand.
Answer the following question.
Draw diagrams to show the elasticity of demand when it is:
(i) Greater than one
(ii) Less than one
(iii) Unity
Arrange the following coefficients of price elasticity of demand in ascending order:
(−) 3.1, (−) 0.2, (−) 1.1
Elasticity of demand is equal to one indicates
What are the degrees of price elasticity of Demand?
If quantity supplied increases by 60% due to a 50% increase in price, then elasticity of supply is ______
If a good takes up a significant share of consumers' budget, its demand will be ______.
Assertion (A): Elasticity of demand explains that one variable is influenced by another variable.
Reasoning (R): The concept of elasticity of demand indicates the effect of price and changes in other factors on demand.
Study the following table and answer the questions:
| Price of Pen (₹) | Demand for Pen |
| 10 | 500 |
| `square` | 400 |
| 30 | `square` |
| `square` | 200 |
| 50 | `square` |
Questions:
- Complete the above table.
- Which type of relationship is found between the price of a pen and demand for the pen?
