Theory of Demand and Supply

Identify the factor which generally keeps the price elasticity of demand for a food low.

Demand tends to be inelastic when:

• The good is a necessity.

• There are no close substitutes.

• It forms a small part of income.

• The price is low.

• It’s consumed habitually.

a movement along the demand curve fro soft drinks is best described as

If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to —

Increase because the quantity demanded decreases less than the price increase.

if quantity demanded for mutton increases by 5% when the price of chicken increases by 20%, the cross price elasticity of demand between mutton and chicken is

Exy​= change in quantity demanded of good X​/ % change in price of good Y% 

If electricity demand is inelastic, and electricity charges increase,

Quantity demanded will fall by a relatively small amount

a decrease in price willl result in an increase in total revenue if.......................