Micro

Market Equilibrium

Medium

Read the passage carefully and answer the questions based on the passage:

Elasticity of Demand

The demand for a good moves in the opposite direction to its price. But the impact of the price change is always not the same. Sometimes, the demand for a good changes considerably even for small price changes. On the other hand, there are some goods for which the demand is not affected much by price changes. Demands for some goods are very responsive to price changes while demands for certain others are not so responsive to price changes. Price elasticity of demand is a measure of the responsiveness of the demand for a good to changes in its price. The price elasticity of demand for a good depends on the nature of the good and the availability of close substitutes of the good.

An individual buys $15$ kg of sugar when its price is Rs. $5$ per kg. When the price increases to Rs. $7$ per kg, the demand goes down to $12$ kg of sugar. What is the price elasticity of demand for sugar?

$0.3$

$0.5$

$0.4$

$-0.3$

✅ Correct Option: 2

Option 2: 0.5 -> Price elasticity of demand is calculated as (% change in quantity demanded) / (% change in price). Here: % change in quantity = [(12-15)/15] × 100 = -20%, and % change in price = [(7-5)/5] × 100 = 40%. Therefore, elasticity = -20% / 40% = -0.5. The absolute value is 0.5, indicating inelastic demand (less than 1) where quantity demanded changes proportionally less than price changes. -> correct

2023: 1 June Shift 1

For a given demand function Y = 50 - 2P, the quantity demanded at P = Rs. 20 is :

2025: 21 May Shift 1

To be effective, the floor price should be determined

2026: 31 May Shift 1

Equilibrium in which market is adjusted by invisible hands, and can be defined as zero excess demand and zero excess supply?

2025: 29 May Shift 2

Arrange the following statements in chronological sequence about how government intervention in the form of price control has an impact on the market.

(A) There will be an excess demand for sugar in the market at that price.

(B) Government-imposed upper limit on the price of sugar.

(D) It could end up creating a shortage of sugar in the market.

Choose the correct answer from the options given below:

2025: 30 May Shift 2

A functional relation between the two variables expressed $y = 50 - x$ , will have slope.

2025: 2 June Shift 1

What would price ceiling lead to when the maximum price is fixed lower than the equilibrium price?

An individual buys 151515 kg of sugar when its price is Rs. 555 per kg. When the price increases to Rs. 777 per kg, the demand goes down to 121212 kg of sugar. What is the price elasticity of demand for sugar?

Solution

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CUET Economics Past Year Questions (Topic-Wise)

An individual buys $15$ kg of sugar when its price is Rs. $5$ per kg. When the price increases to Rs. $7$ per kg, the demand goes down to $12$ kg of sugar. What is the price elasticity of demand for sugar?