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    Tutorial: Eco162 Elasticity

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    yasmeen
    This document provides a tutorial on elasticity, including: 1) A table showing the quantity demanded of Goods B, C, and D at various price levels of Good B, and questions calculating the price elasticity of demand for Good B and cross elasticities of demand between Goods B-C and B-D. 2) Additional questions calculating price and cross elasticities of demand for Goods A and B using data on price, quantity demanded, and income. 3) Questions defining relationships between products based on calculated cross elasticities and identifying good types. 4) Further elasticity questions using additional data on price, quantity demanded, supplied, and income.

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    Tutorial: Eco162 Elasticity

    Uploaded by

    yasmeen
    95 views3 pages
    This document provides a tutorial on elasticity, including: 1) A table showing the quantity demanded of Goods B, C, and D at various price levels of Good B, and questions calculating the price elasticity of demand for Good B and cross elasticities of demand between Goods B-C and B-D. 2) Additional questions calculating price and cross elasticities of demand for Goods A and B using data on price, quantity demanded, and income. 3) Questions defining relationships between products based on calculated cross elasticities and identifying good types. 4) Further elasticity questions using additional data on price, quantity demanded, supplied, and income.

    Original Title

    TUTORIAL_ELASTICITY

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    This document provides a tutorial on elasticity, including: 1) A table showing the quantity demanded of Goods B, C, and D at various price levels of Good B, and questions calculating the price elasticity of demand for Good B and cross elasticities of demand between Goods B-C and B-D. 2) Additional questions calculating price and cross elasticities of demand for Goods A and B using data on price, quantity demanded, and income. 3) Questions defining relationships between products based on calculated cross elasticities and identifying good types. 4) Further elasticity questions using additional data on price, quantity demanded, supplied, and income.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    95 views3 pages

    Tutorial: Eco162 Elasticity

    Uploaded by

    yasmeen
    This document provides a tutorial on elasticity, including: 1) A table showing the quantity demanded of Goods B, C, and D at various price levels of Good B, and questions calculating the price elasticity of demand for Good B and cross elasticities of demand between Goods B-C and B-D. 2) Additional questions calculating price and cross elasticities of demand for Goods A and B using data on price, quantity demanded, and income. 3) Questions defining relationships between products based on calculated cross elasticities and identifying good types. 4) Further elasticity questions using additional data on price, quantity demanded, supplied, and income.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 3

    TUTORIAL : ECO162

    ELASTICITY

    QUESTION 1

    The table below shows the quantity demanded for Good B, C and D at various price levels for
    Good B.

    Price of Good B Quantity demanded Quantity demanded Quantity demanded


    (RM) for Good B (units) for Good C (units) for Good D (units)
    2 1500 1000 300
    4 1200 800 300
    6 1000 600 300
    8 900 500 300
    10 800 400 300

    a) Calculate the price elasticity of demand for good B when the price of good B increases
    from RM4 to RM 10. Identify the degree of elasticity.
    (3 marks)

    b) Calculate the cross elasticity of demand for following:


    i. Between good B and C when the price of good B decreases from RM 8 to RM6.

    ii. Between good B and D when the price of good B increases from RM2 to RM 10.

    (4 marks)

    c) State the type of relationship between:

    i) Good B and C: …………………………………………………………………….

    ii) Good B and D:………………………………………………………………………


    (1 mark)

    d) Suppose the government raises the minimum wage in Malaysia from RM700 to RM850.
    As a result, demand for good C increases from 500 to 800 units. Calculate the income
    elasticity of demand for good C, and identify the type of good.
    (2 marks)

    QUESTION 2
    The table below shows the price of Good A, quantity demanded for Good A and Good B, and
    income of consumers.

    Price of good A Quantity Demand for Quantity Demand for Income (RM)
    (RM) good A (Units) good B (Units)
    3.00 100 20 1000
    5.00 70 40 1500
    7.00 40 60 2000

    a. Calculate the price elasticity of demand for good A if the price of A increases from RM3.00
    to RM5.00. State whether the demand is elastic or inelastic.
    (2 marks)

    b. Calculate the cross elasticity of demand for good B if the price of good A decreases from
    RM7.00 to RM5.00. What is the relationship between good B and A?
    (2 marks)

    QUESTION 3

    When the price of Product X reduces from RM40 to RM24 per unit, the quantity demanded for
    Product Y also reduces from 220 units to 200 units.

    a. Based on the above information, calculate the cross elasticity of demand for Product X
    and Y.
    (2 marks)

    b. Identify the type of relationship between Product X and Y.


    (1 mark)

    QUESTION 4

    2
    Study the table below:

    Price of Good A Quantity demanded (units) Consumers’ income


    (RM per unit) per month (RM)
    Good A Good B
    1 100 1000 800
    2 50 500 700
    3 25 250 600
    4 20 200 500
    5 18 180 400

    Suppose the price of Good A increases from RM3 per unit to RM4 per unit, calculate:

    a. the price elasticity of demand for Good A. State whether demand is elastic or inelastic.
    (2 marks)

    b. income elasticity of demand for good A and B when the consumers' income increases
    from RM500 to RM700.
    (3 marks)

    c. identify the type of good for Product A and Product B.


    (1 mark)

    QUESTION 5

    The table below shows the price of Good A, quantity demanded for Good A and quantity supplied
    for Good A, and income of consumers.

    Price of good A Quantity demanded for Quantity supplied for


    (RM) good A (Units) good A (Units)
    5.00 120 50
    10.00 90 100
    15.00 60 150

    d. Calculate the price elasticity of demand for good A if the price of A increases from RM5.00
    to RM10.00. State whether the demand is elastic or inelastic.
    (2 marks)

    e. Calculate the price elasticity of supply for good A if the price of good A decreases from
    RM15.00 to RM10.00.
    (2 marks)

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