Match the items of the following two lists and suggest the correct code : Choose the correct option : Codes : a b c dList – I List – II a. Zero Income Elasticity i. Substitute goods b. Unit Cross Elasticity ii. Complementary goods c. Positive Cross Elasticity iii. Indifferent goods d. Negative Cross Elasticity iv. Independent goods
iii iv i ii
a. Zero income elasticity means demand does not change at all when income changes. Such goods are neutral to income, called indifferent goods in the list, e.g. salt. So a matches iii.
c. Positive cross elasticity means a rise in the price of one good raises the demand for the other, which happens with substitutes such as tea and coffee. So c matches i.
d. Negative cross elasticity means a rise in the price of one good reduces the demand for the other, which happens with complements such as cars and petrol. So d matches ii.
b. Unit cross elasticity is left with independent goods (iv). Strictly, independent goods have zero cross elasticity, because the price of one has no effect on the demand for the other; the pairing here follows from the other three, which are unambiguous.
The code is a–iii, b–iv, c–i, d–ii.
Hence, iii iv i ii.
Similar Questions
Match the items of List - I with those of List - II and indicate the correct code :
List - I List - II (a) Substitute Goods (i) Negative Cross Elasticity (b) Complementary Goods (ii) Low Price Elasticity (c) Giffen Goods (iii) Positive Cross Elasticity (d) High Income Group Consumption Goods (iv) Positive Price Elasticity Codes :
(a) (b) (c) (d)
The following is the demand function in the small market :
\(Q = 50 - 5P\)
Where ‘Q’ denotes quantity in physical units and ‘P’ denotes price of the commodity. At price ₹ 5, the point price elasticity of demand would be :
A rectangular hyperbola shaped demand curve on all its points has :
A rectangular hyperbola shaped demand curve on all its points has
In case the elasticity of demand on an average revenue curve is equal to unity, the marginal revenue will be :
Important Questions from The elasticity of demand and its measurement
When the price increase of a commodity is followed by increased total revenue, which one of the following is the price elasticity coefficient?
Which factor is mainly responsible for increase in demand of natural resources?
When the price of a good falls from Rs. 20 per unit to Rs. 15 per unit, its demand rises by 25 percent. Calculate the price elasticity of demand. (by percentage method)
The interest elasticity of demand for money in liquidity trap is:
What is the value of price elasticity of demand for the rectangular hyperbola demand curve ?
