Solution

DEMAND AND ELASTICITY OF DEMAND

Class 11 - Economics

1. (c) fall
Explanation: fall
2. (c) substitute
Explanation: substitute
3. (b) fall in demand for the other.
Explanation: fall in demand for the other.
4. (d) substitute goods
Explanation: substitute goods
5. (c) Higher
Explanation: Higher
6. (d) Inelastic
Explanation: Inelastic
7. (b) infinity
Explanation: infinity
8. (c) inelastic
Explanation: inelastic
9.
(b) negative income effect is greater than substitution effect
Explanation: Law of demand fails only if the negative income effect is stronger than the substitution effect. So that while the
law of demand may or may not fail in case of inferior goods, it must always fail in case of Giffen goods.
10.
(c) horizontal
Explanation: Market demand curve is obtained by summation of the individual horizontal demand curves.
11.
(d) fall
Explanation: Electricity and electric appliances are complementary to each other. As the price of electricity rises, the demand
for electric appliances falls.
12.
(b) quantity demanded
Explanation: Quantity demanded is the quantity of a commodity that people are willing to buy at a particular price at a
particular point of time.
13.
(b) An increase in income
Explanation: Other things remaining constant, there is a positive relationship between income and quantity demanded.
14.
(c) Inferior good
Explanation: An inferior good is a type of good for which demand declines as the level of income increases.
15.
(b) Rise in income
Explanation: Any factor other than price shifts demand curve.
Increase in demand is depicted through rightward shift,due to increase in income demand of a good increases.

16.
(c) Giffen goods

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 Explanation: Giffen goods are highly inferior goods which are the exception to the law of demand.
17.
(c) Shifts to the right
Explanation: Shifts to the right
18. (a) Downward from left to right
Explanation: Demand Curve generally slopes downward from left to right.
19.
(b) leftward shift of the demand curve
Explanation: A leftward shift in the demand curve indicates a decrease in demand because consumers are purchasing fewer
products for the same price.
20. (a) None of these
Explanation: All these goods are substitute goods.
21. (a) Juice and cold drink
Explanation: Substitute goods are two alternative goods that could be used for the same purpose. If the price of one good
increases, then demand the substitute is likely to rise.
22.
(c) Substitute goods
Explanation: Substitute goods
23.
(c) price effect
Explanation: The effect on the quantity demanded of a change in its own price is called the price effect. Change in price, in
general, exerts two influences on quantity demanded. These are income effect and the substitution effect.
24.
(b) change in demand due to factors other than own price of the commodity
Explanation: A shift in the demand curve occurs when the whole demand curve moves to the right or left. A demand curve
shifts when a determinant of demand other than price changes.
25.
(b) Income of the consumer should not change
Explanation: Assumption of the law of demand is that factors other than own price remain constant.
26. (a) Inferior goods
Explanation: Inferior goods are those in case of which there is a negative relationship between income and quantity
demanded.
27.
(c) Giffen goods
Explanation: In the case of Giffen good, It is seen that when the price of the good increases, the quantity demanded of the
good increases and when the price of the good decreases, the quantity demanded of the good decreases. The positive income
effect is stronger than the negative substitution effect.
28.
(c) increase in real income of the consumer and increase in purchasing power of the consumer
Explanation: A fall in own price leads to an increase in real income of the consumer and increase in purchasing power of the
consumer. A consumer can buy more of the commodity with the same income.
29.
(b) negative
Explanation: An inferior good is a good whose demand decreases when consumer income increases. Hence, the income effect
for an inferior good is negative.
30.
(c) infinity
Explanation: A horizontal straight-line demand curve is known as a perfectly elastic demand curve. It shows that Ed = infinity.
It is a situation when even the slightest rise in price leads to zero demand for the commodity.

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31.
(c) inelastic
Explanation: inelastic
32.
(d) luxuries
Explanation: Luxuries like an air conditioner, costly furniture etc have elastic demand.
33.
Proportionate Change in Demand
(c) Proportionate Change in Price

Proportionate Change in Demand

Explanation: Elasticity of demand =
Proportionate Change in Price

34.
(d) perfectly inelastic
Explanation: perfectly inelastic
35.
(c) Price of the goods falls, expenditure on it falls
Explanation: Price of the goods falls, expenditure on it falls.
36.
(c) the price elasticity of demand is zero
Explanation: the price elasticity of demand is zero
37.
(c) becomes less elastic
Explanation: As we move down a straight line downward sloping demand curve, price elasticity of demand becomes less
elastic. Because percentage change in quantity demanded is less than the percentage change in price.
38.
(c) elastic
Explanation: elastic
39.
(b) a horizontal straight line
Explanation: A horizontal straight-line demand curve is known as a perfectly elastic demand curve. It shows that Ed is
infinity.
40. (a) Elastic
Explanation: Demand for a commodity is elastic if Ed is greater than 1. Implying that percentage change in quantity
demanded is greater than percentage change in price of the commodity.
41. (a) less than unitary elastic
Explanation: Demand is inelastic if Ed < 1. implying that percentage change in quantity demanded is less than the percentage
change in the price of the commodity.
42.
(d) 1.25
Explanation: using percentage method of calculating elasticity
% change in quantity demanded = (50/400)*100 = 12.5%
% change in price = 10%
12,5/10 = 1.25 =ed

43.
(b) Rs. 120
Explanation: ed = (ΔQ/ ΔP) * (P/Q)
ΔQ = 5
ΔP = 5
P=?
Q= 100
ed = 1.2

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 by using above formula
1.2 = (5/5)*(P/100)
P = 120

44.
(d) increased price elasticity of demand for movie theater tickets
Explanation: increased price elasticity of demand for movie theater tickets
45.
(d) Negative
Explanation: Income effect of inferior goods is negative. As income, people prefer to buy normal goods and demand for
inferior goods decreases.
46.
(d) decrease by 20 percent
Explanation: decrease by 20 percent
47.
(c) 4
Explanation: ed = % change in quantity demanded / % change in price
% change in quantity = (100-50) / 50 ) * 100 = 100%
% change in price = 25%
by using above formula ;
100/25 = 4

48. (a) 4
Explanation: 4
49.
(b) Expenditure will increase
Explanation: As per total outlay method
(i) If with a fall in price (demand increases) the total expenditure increases or with a rise in price (demand falls), the total
expenditure falls, in that case the elasticity of demand is greater than one i.e. ED > 1.
(ii) If with a rise or fall in the price (demand falls or rises respectively), the total expenditure remains the same, the demand will
be unitary elastic or ED = 1.
(iii) If with a fall in price (Demand rises), the total expenditure also falls, and with a rise in price (Demand falls) the total
expenditure also rises, the demand is said to be less classic or elasticity of demand is less than one (ED < 1).

50.
(c) Fruits
Explanation: It is only option of non-necessity/mandatory good among given options.

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