Suggestion Questions:

1) Suppose Pepsi and coke are substitute in consumption. There is a rise in price of coke and at the
same time there is some technological improvement in production of Pepsi. Comment on
market clearing price and quantity for Pepsi graphically. (5 marks)
2) What is demand forecasting? Explain one method of demand forecasting. (2+3)
3) Define Demand. Distinguish between individual demand and market demand. Why demand
curve slope downwards? Write the exceptions to the law of demand. (2+3+3)
4) Discuss graphically the demand for tea market for following cases. (10)
a) Increase in price of tea.
b) Increase in price of coffee.
c) Increase in price of sugar.
d) Decrease in price of milk.
5) Explain change in demand and change in quantity demanded for a product with appropriate
example. (5)
6) What is the importance of demand forecasting? Discuss both qualitative and quantitative
method of demand forecasting. (3+7)
7) Explain the relation between individual demand and market demand for a product. (5)
8) Explain the method of statistical estimation of demand function. (10)
9) Explain any one method of demand forecasting. (5)
10) Explain Delphi method of demand forecasting. (5)
11) Explain the difference between short term forecasting and long-term forecasting. (5)
12) Mention the variables from below those lead to shift of the demand curve or movement along
the demand curve for wooden pencil. (5)
a) Qty of wooden pencil demanded.
b) Price of pen pencil.
c) Price of wooden pencil.
d) Consumer income.
13) Define law of demand and what are the determinants of demand. (2+3)

Ans 4. With the price of increase in coffee, as tea and coffee are substitute, so some consumer will
shift their demand from coffee to tea, as a result the initial demand curve will be shifted parallelly
rightwards from D0 t to D1.

Tea and sugar are complimentary in consumption. If there is a decrease in in price of sugar. The
demand curve will shift Parallelly from leftwards to rightwards.

2016

1) Discuss the following:

a) ARC elasticity and point elasticity
2) Relationship between price elasticity demand and slope of the demand curve. (5)
3) State and prove the relationship average revenue marginal revenue and price elasticity of
demand.
 2017

1. State the concept of elasticity. If a commodity is necessary then will its elasticity be different
from a luxury commodity? (5)
2. Distinguish among: own price, cross price, and income elasticity of demand.

2015

1) Would you expect cross elasticity between the following pairs of products to be positive,
negative, or zero. Justify your answer: butter bread and garlic bread. Construction of residential
housing kitchen chimney. (5)
a) State relationship between average revenue, marginal revenue and price elasticity of
demand. (5)
b) What is meant by price elasticity of demand for a commodity? How can you measure it?
(2+2)
c) Describe the factors affecting price elasticity of demand for a commodity. (5)
d) How can you measure the price elasticity demand at a particular point on the demand
curve? How does the elasticity varies along the demand curve? (2+2)
e) Make a clear distinction between elastic demand and inelastic demand with proper example
of each case. (5)
f) Derive price elastic demand t a particular point on the demand curve. Show that the
elasticity of demand varies from zero to infinity along the demand curve. (5+5)
g) Suppose the value for price elasticity of demand is 0.2. Interpret the value and also
comment on the nature of this product.

2016

Ans. 1 If we want measure price elasticity by using point method on a nonlinear demand curve,
we have to draw a tangent at that particular point of the demand curve.

Ans. 2 Price elasticity (ep) of demand = %age change in qty demanded/%age change in price.

=p/q * bqdp

= price/qty * 1/dp/dq

= price/qty * 1/slope1

Ans. 3 Income elasticity of demand %change in qty/%change in income.

Necessary goods <1 but positive.

Luxury goods > 1

Ans..4 Definition, formula, classification.

Ans. 5