CBSE Important Questions

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Economics - CBSE CLASS XII

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Q .54 istinguish between decrease in demand and contraction in demand.

Ans : Same as above

Q . 55. State 3 reasons for rightward shift in demand curve.

Ans : 1. When income of consumer increases.
2. when price of substitute good increases.
3. Increase in no. of consumers.

Q. 56 . State 3 reasons for leftward shift in the demand curve.

Ans: 1. When income of consumer falls.
2. When price of substitute good decreases.
3. Decrease in no. of consumers

Q 57 . Explain the geometric method of measuring price elasticity of demand.

Ans : Geometric method measures elasticity of demand at different points on the demand curve. It is also called ‘point method of measuring elasticity of demand

MN is a straight line demand curve sloping downward .It shows that when price is zero, qty. is ON and when price is OM, qty. is zero. P divides the demand curve in two segments – upper and lower

Q 58 . Explain 3/4 factors that affect elasticity of demand.

Ans : 1.Nature of commodity : Necessaries ( salt, sugar, etc.) and jointly demanded goods ( car and petrol) have inelastic demand as change in prices do not effect their demand. Luxuries have elastic demand

2 Availability of substitutes : Demand for goods which have substitutes is more elastic because when price of a commodity falls in relation to its substitute its demand rises.

3 Income of consumer : People whose income is very high or very low , their demand is inelastic as rise and fall in prices do not effect their demand.

Q 59.  What will be the elasticity of demand in the following cases-

1 A rise in the price of the commodity increases the total expenditure on it.
Less than unitary elastic.

2 A rise in the price of the commodity reduces the total expenditure on it.
Greater than unitary elastic

3 A change in price of the commodity does not change the total expenditure on it.

Ans : Unitary elastic

Q 60 .How does the availability of substitutes affect the price elasticity of demand?

 Ans : Demand for goods which have substitutes is more elastic because when price of a commodity falls in relation to its substitute its demand rises. The consumers will buy more of it in place of its substitute.                 

Q 61. A dentist was charging Rs 300 for a standard cleaning job per month and used to generate Rs 30000. She had increased her price of dental cleaning to Rs 350. As a result of this the total revenue generated was Rs 33250. What can you conclude about elasticity of demand of her dental service?

Ans :  Ed < 1 because as the price increases the demand also increases.

Q 62 : A consumer buys 1000 units at Rs 10 per unit. When the price falls he buys 1400 units. If the price elasticity is – 2, what is the new price?

Ans :

-2= ; ΔP= -2

Price is Rs. (10 – 2) = Rs.

Q 63. The market price of good changes from Rs 5 to Rs 4. As a result the demand increases by 12 units. If the price elasticity is – 1.5, find the initial and final quantity demanded.

Ans :

Q= 40 units
New Quantity demanded is 52 units.

Q 64. With the rise in the price by Rs 5, the quantity demanded changes from 100 to 95 units. The price elasticity of demand is – 1.2. Find out price before change.

Ans:

Price is Rs 120/-

Q 65 Calculate price elasticity using Total Expenditure method

Price of commodity X

Quantity Demanded of X

8

100

10

90

Price of commodity Y

Quantity Demanded of Y

8

100

10

80

Total Expenditure in case of X is 800 and 900

Elasticity of demand for X is < 1 as in response to rise in price, expenditure has also  increased though qty. demanded  is reduced.

Total exp. For Y is 800 and 800
For Y it is = 1 as with increase in price,  exp. is the same  even though qty. demanded is  reduced.

Q 66 . When the price of the commodity is Rs 20 per unit, quantity demanded is 800 units. When the price falls by 10%, quantity demanded rises to 1080 units. Calculate the price elasticity of demand.

Ans:

Q 67 . Price elasticity of demand is -2. The consumer buys some quantity of the commodity is Rs 8 per unit. When the price falls he buys 50 % more of the quantity. What is the new price?

Ans :

-2 = New price is  8 – 2= Rs. 6.

Q 68. Price elasticity of demand is -3. If the price rises from Rs 10 to 12 per unit, what is the percentage change in demand?

Ans :
 x  =  % change in demand = 60%

Q 69. Price elasticity of a commodity is -1. The consumer buys 50 units when price is Rs 2 per unit. How many units will the consumer buys if the price is Rs 4 per unit. Find out elasticity of demand using total expenditure method?

Ans : When he buys 50 units for Rs. 2 /unit , his total expenditure is Rs. 100.
Ed= 1, i.e, demand is unitary elastic so total expenditure will not change.
He will buy 25 units if the price is Rs. 4

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Prepared By: Mrs. kritika bhola
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