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Question
Match the following:
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Group A
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Group B
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1. Cars and petrol
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a. Elastic demand
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2. Point method
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b. Complementary
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3. Necessary goods
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c. Geometric method
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d. Inelastic demand
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Solution
|
Group A
|
Group B
|
|
1. Cars and petrol
|
b. Complementary
|
|
2. Point method
|
c. Geometric method
|
|
3. Necessary goods
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d. Inelastic demand
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- Cars and petrol are complementary goods. In other words, they are goods which are demanded together. For such goods there exists an inverse relation between the demand for one good and the price for other good. That is, a rise in the price of petrol will lead to a fall in the demand for cars.
- Geometric method is also called point method of measuring elasticity. Under this method, elasticity is measured at different points on a demand curve.
- Necessary goods are those goods which a consumer demands for sustaining his life. A consumer cannot reduce the consumption of these goods. For example, food is a necessity good. The demand for such goods does not change much in response to the changes in their prices. Even when the price rises the consumer cannot reduce their demand. Hence, such goods have an inelastic demand.
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