Economics: Supply and Demand and Cross Flexibility

FOUNDATION IN BUSINESS

BUS0615/PRINCIPLES OF ECONOMICS

TUTORIAL 5

Reading: Chapter 4 in the textbook.

SECTION A

1 ) The price flexibility of require is the percentage change in price divided by the percentage change in quantity demanded.

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2 . Demand is said to be inelastic when a reduction in value results in a decrease in total revenue.

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3. When the price of coffee increases 8%, variety demanded decreases 5%. The elasticity of coffee should be inelastic. (PERCENTAGE OF PRICE ARE GREATER THAN THE PERCENTAGE OF AMOUNT BY 1/1/2)

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some. The more alternatives there are to get the product a lot more price elastic the demand to get the product is.

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five. A straight demand competition may be described as perfectly cost inelastic.

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6. If the elasticity pourcentage of with regard to coconuts is usually 0. forty five, then a twenty percent fall in price will result in a great 8% along with quantity demanded. (QUANTITY REQUIRED INCREASE BY 8%)

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7. In case the quantity demand of tea decreases by simply 2% when the price of coffee diminishes by 8%, the cross elasticity of demand between tea and coffee can be 0. 25.

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8. If the mix elasticity of demand between fish and chicken can be 2, then a 2% embrace the price of fish will result in a 4% decline in the quantity of poultry demanded. (QUANTITY OF THE CHICKEN INCREASES TRIGGER IT ACTS AS AN ALTERNATIVE GOODS)

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9. In the event that bus travel is a substandard good, then its income elasticity of demand will be negative.

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10. The moment income improvements, the quantity required for a product remains similar, the cash flow elasticity of demand for the favorable is negative one.

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11. The cross elasticity of with regard to product X with respect to the price of item Y is 1 . 00. It can be concluded that X and Y are complementary items.

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12. A positive income elasticity of demand pourcentage indicates that the product is a substandard good.

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13. A vertical source curve can be described as flawlessly price inelastic.

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18. A supply curve that includes a...

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