Economics may/june 2008 P1

[Jane Voon]

hi can someone help me pls for MCQ questions! really need your help

6.Good X is a substitute for good Y and a complement to good Z.
What would happen after a fall in the price of good X?
A Only the demand for X will rise.
B Demand for X, Y and Z will rise.
C Demand for Y will fall and for Z will rise.
D Demand for Y will rise and for Z will fall.

ans: c whY???

7. A good has unitary price elasticity of demand and at a price of $25 it sells 100 000 units.
Which price must the firm charge if it wants to sell 125 000 units of the good?
A $22 B $20 C $18 D $15

ans: b how???

The table shows how an individual’s consumption of cola and nuts varies with income.
income ($) cola (cans) nuts (packets)
50 2 0
100 4 1
Which statement about income elasticity of demand over the range of income shown is true?
A For cola it is less than 1.
B For cola it is greater than 1.
C For nuts it is greater than 1.
D For nuts it is zero

ans c why

 

[Bachelor]

hi can someone help me pls for MCQ questions! really need your help

6.Good X is a substitute for good Y and a complement to good Z.
What would happen after a fall in the price of good X?
A Only the demand for X will rise.
B Demand for X, Y and Z will rise.
C Demand for Y will fall and for Z will rise.
D Demand for Y will rise and for Z will fall.

ans: c whY???

7. A good has unitary price elasticity of demand and at a price of $25 it sells 100 000 units.
Which price must the firm charge if it wants to sell 125 000 units of the good?
A $22 B $20 C $18 D $15

ans: b how???

The table shows how an individual’s consumption of cola and nuts varies with income.
income ($) cola (cans) nuts (packets)
50 2 0
100 4 1
Which statement about income elasticity of demand over the range of income shown is true?
A For cola it is less than 1.
B For cola it is greater than 1.
C For nuts it is greater than 1.
D For nuts it is zero

ans c why

Ans 6 the answer is because the demand for y will surely fall because its substitute which is x is now more cheaper to get so people will leave y and will switch to product x secondly product z demand will rise because its complement is now cheap so they will consume it...produce x alone has no value because its a part of z its nthng without z..for e.g if sugar becomes cheaper people will consume tea...

 

[Bachelor]

hi can someone help me pls for MCQ questions! really need your help

6.Good X is a substitute for good Y and a complement to good Z.
What would happen after a fall in the price of good X?
A Only the demand for X will rise.
B Demand for X, Y and Z will rise.
C Demand for Y will fall and for Z will rise.
D Demand for Y will rise and for Z will fall.

ans: c whY???

7. A good has unitary price elasticity of demand and at a price of $25 it sells 100 000 units.
Which price must the firm charge if it wants to sell 125 000 units of the good?
A $22 B $20 C $18 D $15

ans: b how???

The table shows how an individual’s consumption of cola and nuts varies with income.
income ($) cola (cans) nuts (packets)
50 2 0
100 4 1
Which statement about income elasticity of demand over the range of income shown is true?
A For cola it is less than 1.
B For cola it is greater than 1.
C For nuts it is greater than 1.
D For nuts it is zero

ans c why

Ans8. if u notice person earning 50 consuming no nuts and when his income got doubled then he consumed only one nut this shows that demand for nuts is elastic i.e change in demand is high as compare to change is price as its not a necessary item...
cola consumption doubled with the income showing the demand is unit elastic meaning change in demand is same as compare to price

 

[Bachelor]

Ans8. if u notice person earning 50 consuming no nuts and when his income got doubled then he consumed only one nut this shows that demand for nuts is elastic i.e change in demand is high as compare to change is price as its not a necessary item...
cola consumption doubled with the income showing the demand is unit elastic meaning change in demand is same as compare to price

ans 7 can be solved mathemetically..understand the logic..as the price increases sales of the product will decrease meaning these two things are inversely realted so...
25=125000
x=100000 now solve it u will get the answer...cross mutiply them i.e 100000x25/125000