This unit covers price, income, cross and advertisement elasticity of demand (concept, degrees and calculation by percentage and average methods), point price elasticity, price elasticity and total expenditure, the uses of these elasticities, and price elasticity of supply.
Elasticity of Demand and Supply
Elasticity of Demand and Supply
Learn Elasticity of Demand and Supply in Microeconomics for Business with comprehensive educational content from Padandas.
Nov 7, 2026
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1.
Asked in 2077 (2 marks)
Write formula for calculation of elasticity of supply by using average method.
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2.
Long question Asked in 2077 (10 marks)
a) Demand function of Chokobite Chocolate is \( Q_d \) = 1000 - 20P and supply function of Chokobite chocolate \( Q_s \) = 100 + 40P, find equilibrium price and quantity of Chokobite chocolate. Also compute price elasticity of demand at equilibrium price.
b) Fill the following table by using the demand and supply function of Chokobite chocolate and find equilibrium price and quantity of Chokobite chocolate in table.
Price Quantity Demanded (Qd) Quantity Supplied (Qs) Surplus/shortage 5 10 15 20 25 -
3.
Long question Asked in 2077 (15 marks)
Aradhya's demand schedule of ice-cream is given as:
Price (RS) Quantity Demanded (Income = Rs. 20000) Quantity Demanded (Income = Rs. 25000) 180 80 100 220 60 80 a. Calculate price elasticity of demand of ice-cream for Aaradhya when the price of ice-cream increases from Rs. 180 to Rs. 220 at both income levels Rs. 20,000 and Rs. 25,000.
b. Calculate income elasticity of demand of ice-cream for Aaradhyas income increases from Rs. 20000 to Rs. 25,000 at prices Rs. 180 and Rs. 220.
c. Compare and interpret the above results.
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4.
Asked in 2078 (2 marks)
Let, \( ey(\text{mobile set}) = 2.3, ey(\text{potato}) = -0.8 \). Describe the nature of these two goods.
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5.
Asked in 2079 (2 marks)
State the relationship between TR and price elasticity of demand.
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6.
Long question Asked in 2079 (15 marks)
Consider the following supply schedule:
Points: A B C D E Price (Rs): 0 10 20 30 40 Supply (Units): 100 200 300 400 500 a. Compute the price elasticity of supply at movement from B to D and D to B by proportion method.
b. Compute the price elasticity of supply at midway between B and D and D and B by arc method. Why is arc method considered as more appropriate method than proportion method?
c. How do firms use price elasticity of demand in business decision making? Explain with suitable examples.
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