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25 10 18 ? ? ?
26 10 20 ? ? ?
27 10 21 ? ? ?
26 10 20 30 1.15 2
27 10 21 31 1.14 1
Answer :
For instance, a rise within the worth of an honest can cause a decrease within the
amount which will be demanded by shoppers. Similarly, a decrease within the
price or terms of an honest can presumably cause a rise within the demanded
amount of the products.
This indicates the existence of AN inverse relationship between the worth of the
article and therefore the amount demanded by shoppers. This can be
unremarkably called the law of demand and may be diagrammatically delineate
by a line with a downward slope.
The graphical representation is known as the demand curve. The determinants of
demand square measure factors that cause fluctuations within the economic
demand for a product or a service.
The demand curve and the demand schedule help determine the demand
quantity at a price level. An elastic demand implies a robust change quantity
accompanied by a change in price. Similarly, an inelastic demand implies that
volume does not change much even when there is a change in price.
3.
a. Suppose the monthly income of an individual increases from Rs.
10,000 to Rs. 15,000 which increases his demand for clothes from 20
units to 25 units. Calculate the income elasticity of demand and
interpret the result. (5 Marks)
answer
Income elasticity of demand refers to the sensitivity of the quantity
demanded for a certain good to a change in real income of consumers
who buy this good, keeping all other things constant.
Ey = ∆q/∆y × Y/Q
Here, ∆q = 5 units
∆y = 5,000 rs
Q = 20
Y = 10,000 rs
Ey = 5/5,000 × 10,000/20
= 50,000/ 1, 00,000
Ey = 0.5
Answer:
Substitute Products
Substitute products are goods that are in direct competition. An increase
in the price of one product will lead to an increase in demand for the
competing product.
Complementary Products
Ec = ∆qx /∆py × Py / Qx
∆qx = 160-100 = 60
Py = 40
∆py = 50-40 = 10
Ec = 60/10 × 40 /100
= 2400/1000
Ec = = 2.4
As we know cross elasticity of the demand here is Positive. Therefore
the related product is Substitute product.