Concept of Elasticity | Short Questions | Economics | WBCHSE | Higher Secondary | Class 12

Chapter 3 : Concept of Elasticity | Short Questions [2 Marks each]

1. Define elasticity of any function.

Answer: Suppose we have a function y = f(x). In this function elasticity of y with respect to x is defined as the percentage change in y due to one percent change in x.

2. What is partial elasticity? Give examples.

Answer: If a function contains more than one independent variable, then the concept of partial elasticity can be obtained. Suppose we have a function z = f(x,y) where x and y are two independent variables and z is the dependent variable. This function has two partial elasticities: elasticity of z w.r.t x and elasticity of z w.r.t y.

3. Define elasticity of demand.

Answer: Elasticity of demand is the percentage change in the quantity demanded for one percent change in any of the independent variables of the demand function.

4. What are the different types of elasticity of demand?

Answer: There are three types of elasticity of demand : (i) Own Price Elasticity of Demand, (ii) Income Elasticity of Demand, and (iii) Cross Price Elasticity of Demand.

5. Define own price elasticity of demand. [2018, 2023]

Answer: Other things remaining constant, the percentage change in quantity demanded of any commodity due to one percent change in price of that commodity, is called own price elasticity of demand.

6. Define income elasticity of demand. [2016, 2017, 2019, 2022]

Answer: Other things remaining constant, the percentage change in quantity demanded of any commodity due to one percent change in income, is called the income elasticity of demand for that commodity.

7. State the formula for income elasticity of demand.

Answer:

8. Define cross price elasticity of demand.

Or, What is meant by cross price elasticity of demand? [2019]

Answer: Other things remaining constant, the percentage change in the demand for one commodity due to 1% change in the price of any other related commodity is the cross price elasticity of demand.

9. Define arc price elasticity of demand.

Answer: Any portion of a curve is called an arc. Arc elasticity signifies the average elasticity over the arc.

[Where, P₀ = Old price, P₁ = New price, Q₀ = Old Demand, Q₁ = New demand]

10. Is there any relation between elasticity of demand and slope of demand curve?

Answer: There is no relation between elasticity of demand and slope of demand curve. Two straight line demand curves may have different slopes but same elasticity at each price. Again, two straight line demand curves may have same slopes but different elasticities at each price.

11. Mention two factors affecting elasticity of demand.

Answer: Two factors affecting elasticity of demand are – (i) Price of the commodity, (ii) Consumer’s income.

12. What is the meaning of perfectly inelastic demand? [2015, 2022]

Or, What do you mean by perfectly inelastic demand? [2023]

Answer: When the quantity demanded for a commodity is not responsive to change in price, it is called perfectly inelastic demand. Here, e = 0.

13. What will be the shape of perfectly inelastic demand curve?

Answer: The shape of a perfectly inelastic demand curve will be a vertical straight line.

14. What is perfectly elastic demand?

Answer: When the quantity demanded for a commodity is infinitely responsive to a particular price point, it is called perfectly elastic demand. Here, e is equal to infinity.

15. What will be the shape of perfectly elastic demand curve?

Answer: The shape of a perfectly elastic demand curve will be a horizontal straight line.

16. What will be the shape of the demand curve if price elasticity of demand is infinity?

Answer: If price elasticity of demand is infinity, the shape of the demand curve will be a horizontal straight line.

17. What is elastic demand?

Answer: When there is a large change in quantity demanded due to small change in price, it is called elastic demand. Here, e > 1.

18. What is inelastic demand?

Answer: When there is a small change in quantity demanded due to large change in price, it is called inelastic demand. Here, e < 1.

19. If the equation of the demand curve is pq = c (where c is a constant) what will be the value of elasticity of demand on any point of the demand curve?

Answer: On any point of such demand curve, the value of elasticity of demand e = 1 i.e. unitary elastic demand is in operation.

20. What will be the shape of the demand curve if the absolute value of elasticity of demand is unity at all points?

Answer: The shape of such a demand curve will be a rectangular hyperbola.

21. What will be the value of elasticity of demand at the midpoint of a straight line demand curve?

Answer: At the midpoint of a straight line demand curve, the value of elasticity of demand i.e. e = 1.

22. For what kind of goods, the demand is elastic?

Answer: For luxury goods, the demand is elastic i.e. e > 1.

23. What will be the nature of elasticity of demand for necessities?

Answer: For necessities, the elasticity of demand e < 1 i.e. inelastic.

24. What will be the elasticity of demand for a commodity whose consumption can be postponed?

Answer: For a commodity whose consumption can be postponed, the elasticity of demand e > 1 i.e. elastic.

25. What will be the value of price elasticity of demand for a Giffen good?

Answer: For a Giffen good, the value of price elasticity of demand i.e. e_p < 1.

26. What will be the value of price elasticity of demand for luxuries?

Answer: For luxuries, the value of price elasticity of demand i.e e_p > 1.

27. As the price of a commodity decreases from Rs. 4 to Rs. 2, the quantity demanded increases from 10 kg. to 15 kg. respectively. Find out the magnitude of price elasticity of demand for the commodity. [2015]

Answer:

28. As the price of a commodity increases from Rs. 6 to 9, the quantity demanded decreases from 10 kg. to 5 kg. What is the magnitude of price elasticity of demand? [2016]

Answer:

29. As the price of a commodity decreases from Rs. 8 to Rs. 4, the quantity demanded increases from 10 kg. to 15 kg. respectively. What is the magnitude of price elasticity of demand? [2017]

Answer:

30. How can commodities be classified on the basis of income elasticity of demand?

Answer: On the basis of income elasticity of demand, commodities can be classified into five categories –

(i) Normal good (If e_i is positive)

(ii) Inferior good (If e_i is negative)

(iii) Luxury good (If e_i > 1)

(iv) Necessities or Essential good (If e_i < 1)

(v) Neutral good (If e_i = 0)

31. What will be the value of income elasticity of demand for luxuries?

Answer: For luxuries, the value of income elasticity of demand i.e e_i > 1.

32. What will be the value of income elasticity of demand for a Giffen good?

Answer: For a Giffen good, the value of income elasticity of demand i.e. e_i > 1.

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