Sandeep Garg Microeconomics Class 11: Chapter 4 Elasticity of Demand

Sandeep Garg Solutions Class 11 – Chapter 4 – Part A – Microeconomics

Question 1

What is the Elasticity of Demand?

Ans: Elasticity of Demand refers to the percentage change in demand for a commodity with respect to the percentage change in any of the factors affecting demand for that commodity.

Question 2

Question 3

What are the 5 Degrees of Elasticity of Demand?

Ans: 5 types of price elasticities of demand are:

• Perfectly elastic demand
• Perfectly inelastic demand
• Highly elastic demand
• Less elastic demand
• Unitary elastic demand

Question 4

What are the factors that affect the price elasticity of demand?

Ans: Factors affecting the price elasticity of demand are:

• Nature of commodity
• Availability of substitutes
• Income level
• Level of price
• Number of uses
• Time period
• Habits

Also Read: Demand

Question 5

The demand for a good falls to 240 units in response to the rise in price by ₹.2. If the original demand was 300 units at the price of ₹.20, calculate the price elasticity of demand.

New Quantity (Q1) = 240 Units	Rise in Price (△P) = ₹2
Original Quantity (Q) = 300 Units	Original Price = ₹ 20
Change in Quantity (△Q) = -60 Units	New Price (P1) = ₹ 22
Elasticity of demand Ed = ?

State whether the following statements are true or false.

Question 6

A commodity with a large number of close substitutes shows high elasticity of demand.

Ans: True

Question 7

In the case of the horizontal straight line demand curve, demand does not change even with the change in price.

Ans: False