Explain price elasticity of demand.

3

(a)

Consider the demand curve D(P) = 10 - 3p. What is the elasticity at price 5/3?

3

(a)

Suppose the price elasticity of demand for a good is -0.2. If there is a 5% increase in the price of the good, by what percentage will the demand for the good go down?

3

(a)

Differentiate between perfectly elastic and perfectly inelastic demand

3

(a)

A consumer spends Rs 80 on a commodity when price is Rs 1 per unit. If the price increases by Rs 1, his expenditure becomes Rs 96. Comment on PED.

3

(a)

When price of a good is Rs 7 per unit, a consumer buys 12 units. When price falls to Rs 6 per unit he spends Rs 72 on the good. Calculate price elasticity of demand by using the percentage method. Comment on the likely shape of demand curve based on this measure of elasticity.

3

(a)

A consumer buys 14 units of a good at a price of Rs 8 per unit. At price Rs 7 per unit he spends Rs 98 on the good. Calculate price elasticity of demand by the percentage method. Comment upon the shape of demand curve based on this information.

3

(a)

A consumer demands 40 kg of a commodity when its price is Rs1 per kg. If the price increases by Rs 0.10, what would be the quantity demanded? PED = -1.

3

(a)

A consumer spends Rs 80 on a commodity when price is Rs 1 per unit. If the price increases by Rs 1, what would be his expenditure. PED = -0.4?

3

(a)

A consumer buys 80 units of a good at a price of Rs 5 per unit. Suppose, the price elasticity of demand is (-) 2. At what price will he buy 64 units?

3

(a)

A consumer buys 20 units of a good at Rs10 per unit. The price elasticity of demand of this good is (-) 1. Calculate quantity demanded by the consumer when price falls to Rs 8 per unit.

3

(a)

Calculate the price elasticity of demand for a commodity when its price increases by 25% and quantity demanded falls from 150 units to 120 units.

3

(a)

When price of a good falls from Rs 5 to Rs 3 per unit, its demand rises by 40%.Calculate its price elasticity of demand

3

(a)

Differentiate between Law of Demand and Price Elasticity of Demand.

3

(a)

"Elasticity of demand at a common point will be more on a flatter curve than on a steeper curve".Prove

3

(a)