Advertisements
Advertisements
Question
- Luxuries goods have generally elastic demand.
- Goods whose close substitutes are available have inelastic demand.
Options
Statement (i) is false and statement (ii) is true
Statement (i) is true and statement (ii) is false
Both (i) and (ii) are false
Both (i) and (ii) are true
Advertisements
Solution
Statement (i) is true and statement (ii) is false
Explanation:
- Statement (i) is true because luxury goods generally have elastic demand, meaning that a change in price leads to a relatively larger change in the quantity demanded.
- Statement (ii) is false because goods with close substitutes typically have elastic demand, as consumers can easily switch to a substitute if the price of the good increases.
APPEARS IN
RELATED QUESTIONS
Price elasticity of demand of goods X is -2 and goods Y is -3. Which of the two goods is more price elastic and why?
A consumer buys 27 units of a good at a price of Rs 10 per unit. When the price falls to Rs 9 per unit, the demand rises to 30 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.
Fill in the blanks with appropriate alternatives given in the bracket.
Demand elasticity can be measured from demand curve by ___________ method.
What do you mean by an ‘inferior good’? Give some examples.
Consider the demand curve D(p) = 10 − 3p. What is the elasticity at price `5/3` ?
Elasticity of demand is equal to one indicates
If quantity supplied increases by 60% due to a 50% increase in price, then elasticity of supply is ______
Identify the correctly matched pair from the items in Column A by matching them to the items in column B:
| Column A | Column B |
| 1. Increase or decrease in demand for a commodity does not cause any change in its price. | (a) Effect on supply, in the case of Perfectly Elastic Demand. |
| 2. Increase or decrease in demand causes a change in the price of the commodity. Equilibrium quantity remains constant. | (b) Effect on demand, in the case of Perfectly Inelastic Supply. |
| 3. Increase or decrease in demand cause a change in the price of the commodity. Equilibrium quantity remains constant. | (c) Effect on demand, in the case of Perfectly Elastic Supply. |
| 4. Increase or decrease in demand for a commodity does not cause any change in its price. | (d) Effect on supply, in the case of Perfectly Elastic Demand. |
Identify the correctly matched pair from the items in Column A by matching them to the items in Column B:
| Column A | Column B | ||
| 1 | Relatively Inelastic Demand | (a) | ed > 1 |
| 2 | Relatively Elastic Demand | (b) | ed < 1 |
| 3 | Perfectly Inelastic Demand | (c) | ed = 0 |
| 4 | Perfectly Elastic Demand | (d) | ed = 1 |
