Micro

Market Equilibrium

Medium

In which of the following, the demand for a good will be highly price elastic?

When the price of the good and total expenditure on it change in the same direction.

When the price of the good and total expenditure on it change in the opposite direction.

When the price of the good and does not affect the total expenditure.

When the income of the consumer and total expenditure on it change in the same direction.

✅ Correct Option: 2

Option 1 -> This describes inelastic demand where price and total expenditure move together.

Option 2 -> This describes elastic demand where price and total expenditure move in opposite directions.

Option 3 -> This describes unit elastic demand where total expenditure remains constant.

Option 4 -> This relates to income elasticity, not price elasticity.

Hence, Option 2 -> When demand is highly price elastic (|Ed| > 1), price and total expenditure move in opposite directions. If price increases, quantity demanded falls proportionally more, causing total expenditure to decrease. If price decreases, quantity demanded rises proportionally more, causing total expenditure to increase. This inverse relationship between price and total expenditure is the characteristic feature of elastic demand. -> correct

2025: 27 May Shift 2

Arrange the following statement when the market demand curve shifts rightward with the supply curve remaining unchanged.

(A) The shift indicates that at any price the quantity demanded is more than before.

(B) Some individuals will be willing to pay higher price and the price would tend to rise.

(D) At the new equilibrium, quantity and price will be greater than before.

Choose the correct answer from the options given below:

2026: 13 May Shift 2

Arrange the following statements in correct sequence to determine the market equilibrium when the number of firms is fixed.

(A) There is excess demand in the market.

(B) Quantity demanded falls due to law of demand and quantity supplied increases due to law of supply(keeping other factors constant)

(D) The market moves towards the point where the quantity that the firms want to sell is equal to the quantity that the consumers want to buy.

Choose the correct answer from the options given below:

2025: 16 May Shift 1

What will be the shape of unitary elastic supply curve?

2025: 29 May Shift 1

If the price of a good increases from ₹20 to ₹25 and the quantity demanded decreases from 100 units to 80 units, calculate the price elasticity of demand.

2026: 12 May Shift 1

Imposition of price ceiling below the equilibrium price leads to__________

2025: 30 May Shift 2

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

In which of the following, the demand for a good will be highly price elastic?

Solution

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