Q7. Answer the following: 1+3
a) “Petrol is becoming cheaper, yet the demand for cars is not rising.” Does it mean that the law of demand is not operative?
b) The quantity demanded of a commodity at a price of rupees 8 per unit is 600 units. Its price falls by 25% and the quantity demanded rises by 120 units calculate the price elasticity of demand. Is its demand elastic? Give reason.
Q8. Explain how do the following influence demand for a good: 4 a) Rise in income of the consumer when good is an inferior good. Use Diagram.
b) fall in price of substitute good
A consumer consumes only 2 goods X and Y. The marginal rate of substitution is 1. The prices of X&Y are rupees 3 and rupees 4 per unit respectively. Is the consumer in equilibrium? If not, then what will a consumer do to reach the point of equilibrium
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