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Suppose on 30 September 2003, the Indian National Railways (INR) unilaterally lowered the AC I class passenger fare of the Mumbai-Delhi Rajdhani Express!
Fare (per 100 KM) Average Daily Sale (Rs.
Pre- 09-03 Post-09-03 Pre-09-03 Post-09-03
INR 45 30 376836 448962
AIR 90 90 1037375 1207326
Assuming travel by AIR as the only alternative for high-income groups, do you think that a computation of the own-price elasticity of demand for Mumbai-Delhi travel by Rajdhani Express as in the earlier case will yield the correct measure?
□ Emily has decided to spend one-third of her income on clothing. What is Emily’s demand curve for clothing?
□ Emily’s taste – as reported in the previous question - has now changed. She now realizes the importance of savings and spends only one-tenth of her income on clothing, instead of one-third. How will Emily’s demand curve change?
What is the demand curve signify?
Q6:- A and B drive to a petrol pump. A says “I want 20 litres of petrol” and B says “I want Rs. 20/- worth of petrol”. What can you say about A and B’s price elasticity of demand on petrol?
□ Q7:- A firm increased the price of its product by 5.0 per cent and observed that its revenue increased by 3.0 per cent. Enthused by this fact, it again raised price by another 5.0 per cent. This time revenue fell by 8.0 per cent.
How can one use the concept of elasticity to explain this be explained?
Q4:- Suppose for a commodity X, demand and supply curves are given by the equations
(1) Qd = 4 - P
(2) Qs = -2+P
(a) What are the price elasticities of the demand curve and the supply curves at the points P = 1, 2, 3, etc.?
(b) Suppose for commodity X, the price elasticity of demand is constant throughout the curve. What can you say about the functional form of the demand curve?
Q3:- given by the equations
(1) Qd = 4 - P
(2) Qs = -2+P
a) What is the price elasticity of the demand curve at the point of equilibrium?
b) What is the price elasticity of the supply curve at the point of equilibrium?
Supposed Sam is the only seller in the market for bottled water and Lorenzo is the only buyer the following list shows the value Lorenzo places on a bottle of water in the car Sam incurs to produce each bottle of water
The technology for a firm is given as
Y=xa where 0 < a < 1
a) Obtain the demand for x and supply of y for this firm.
b) Derive the profit function of this firm.
c) From determine its degree of homogeneity.
d) Obtain the Hessian using above and show that it is convex in p and w.
The technology for a firm is given as
Y=xa where 0 < a < 1
a) Obtain the demand for x and supply of y for this firm.
b) Derive the profit function of this firm.
c) From determine its degree of homogeneity.
d) Obtain the Hessian using above and show that it is convex in p and w.
