There are two goods A and B. The prices of both rise by 7 percent .As a result , demand for A falls by 10.5 percent, while there is no change in demand for B. Find out `E_(P)` of A and B .
1 Answers
Talk Doctor Online in Bissoy App
The price elasticity of supply of commodities X and Y is equal. The price of X falls from Rs.10 to Rs.8 per unit and supply falls by 16 percent. The p
Let us calculate `P.e_(S)` for commodity X ltbr. `P=10," "P_(1)=8," "DeltaP=-2` `%DeltaP=(-2)/(10)xx100=-20%` `%DeltaS=-16%` given `"Hence "P.e_(S)=(%"Change in Quantity supplied"_(X))/(%"Change in price"_(X))=((-)16%)/((-)20%)=0.8` `P.e_(S)" of X"=P.e_(S)" of Y (given)"` Hence `P.e_(S)` of...
2 Answers 1 views
Explain the effect of the following on the supply of a commodity: (a) Fall in the prices of factor inputs (b) Rise in the prices of other commodities.
1. Fall in prices of factors of production- When the amount payable to factors of production and cost of inputs increases, the cost of production also increases. This decreases the profitability....
2 Answers 1 views
Giving reasons state whether the following statement is true or false. 'The supply curve of a good shifts to the right when prices of other goods rise
This statement is false. Increase in prices of other goods makes their production more profitable for the producer. As a result the firm shifts its resources from production of the...
2 Answers 1 views
Retail prices are higher than wholesale prices.
1. Retail price are always higher than wholesale price. 2. Retailer purchases goods from wholesaler then he adds his profit and finally he sells it to-the customers. 3. Thus, retail price is...
2 Answers 1 views
A 5 percent fall in the price of X leads to a 10 percent rise in demand for X. A2 per cent reise in the price of Y leads to a 6 percent fall in demand
`E_(P) " of "X=(10)/(-5)=(-)2` `E_(P) " of "Y=(-6)/(2)=(-)3`
2 Answers 1 views
A consumer consumes only two goods A and B and is in equilicbrium . Price of good a falls . Show that it will lead to rise in dmand for good A . Use U
When consumer is in equilibrium : `(MU_(A))/(P_(A))=(MU_(B))/(P_B)` When price of good A `(P_(A))` falls , then `(MU_(A))/(P_(A))gt(MU_(B))/(P_B)` Since per rupee marginal utility of A `(MU_(A))` is now higher than per...
2 Answers 1 views
A consumer consumes only two goods X and Y whose prices are Rs. 4 and Rs. 5 per unit respectiveely. If the consumer chooses a combination of the two g
Given `P_(x)=4,P_(y)=5and MU_(x)=5,MU_(y)=4` , a consumer will be in equilibrium when : `(MU_(x))/(P_(x))=(MU_(y))/(P_(y))` Substituting values , we find that `(5)/(4)gt(4)/(5)" Or " (MU_(x))/(P_(x))gt(MU_(y))/(P_(y))` Since per rupess `MU_(x)` is higher than...
2 Answers 4 views
When price of a commodity X falls by 10 percent , its demand rises from 150 units to 180 units. Calculate its price elasticity of demand . How much sh
`E_(P)=(% " change in " Q_(d))/(% " change in P")=((30)/(150)xx100)/(-10)=(-2)` `-2=((60)/(150)xx100)/(%" change in price")` `%` change in Price `=(60)/(150)xx100xx(1)/(-2)=-20%`.
2 Answers 1 views
When the price of a commodity falls from Rs. 10 per unit to Rs. 9 per unit , its quantity supplied falls by 20 percent . Calculate its price elesticit
Percent change in price `=(-1)/(10)xx100=-10%` Percent change in supply =-20% `E_(s) =("Percentage change in supply")/("Percentage change in price")=(-20)/(-10)=2`
2 Answers 2 views
If books bought at prices ranging from ₹ 400 to ₹ 1000 are sold at prices ranging from ₹ 500 to ₹ 1200, then what is the greatest possible profit that
Correct Answer - ₹4000
2 Answers 1 views