# TU BBS Microeconomics For Business Important Question Collection 2079 (chapter 3 Elasticity of Demand And Supply)

Feb 5, 2023 Theoretical Questions

1. what are the uses of price elasticity of demand in business decision making ?
2. State the degrees of price elasticity of supply ?
3. What is the difference between price elasticity of demand and cross elasticity of demand ?
4. What do you mean by cross elasticity of demand ?

1. What is price elasticity of demand ?How is it measured with help of point method ?
2. How price elasticity of demand is measured with the help of point method ?

Numerical Problems

1. Calculate price elasticity of supply by arc method when price increase from Rs 10 to Rs 20 and Quantity supplied increases from 40 units to 80 units? 
2. As a result of 2% fall in price of food its demand rises by 8% .Find out price elasticity of demand ?
3. With the help of the information given below . Find out the cross elasticity of demand  
 Price of teaching ? (Rs) Demand for Tea Demand for coffee 20 2000 1800 25 1500 2000

4. As a result of 5% fall in the price of food , its demand rises by 12% .Find out price elasticity of demand and say whether  demand is elastic or inelastic .

1. Consider the following schedule 

 Points A B C D E Px 2 4 6 8 10 Qdx 100 80 60 40 20 Qsx 20 40 60 80 100

a. Compute price elasticity of demand at equilibrium price

b. Compute price elasticity supply at movement from B to D and D to B by percentage method

c. Compute price elasticity of supply at midway between B and D and D and B by arc method .

2. Consider the following demand schedule 

 Points A B C D E Px 8 6 4 2 0 Qdx 0 10 20 30 40

a. Compute price elasticity of demand at movement from B to D and D to B by proportion method.

b. Compute price elasticity of demand at midway between B and D and D and B by arc method .

c.  Compute price elasticity of demand by total outlay method at movement from B to D

3. Suppose individual demand schedule for Suraj , sunny  and Sushila are given below.

 Price Suraj’s Demand Sunny’s demand Sushila’s Demand 10 160 80 40 20 80 40 20 30 40 20 10 40 20 10 0 50 0 0 0

a. Market demand schedule

b. Market demand curve

c. Elasticity of demand when price falls from Rs 30 to 20

d. Elasticity of demand when price rises from Rs 20 to 30.