Demand Schedule is Highly Inelastic in Nature - Engineering Assignment Help

Assignment Task :

1. When price elasticity for demand is negative, it can be implied that the demand schedule is highly inelastic in nature. Therefore, there is no effect of price fluctuations on demand curve. Customers will not leave the market even if price changes by higher margins. Therefore, price reduction is a bad option.

2. Price elasticity for demand of water is highly inelastic.

• Price elasticity for demand of tobacco is highly elastic.
• Price elasticity for demand of Wifi is moderately elastic.

a. It implies that Price elasticity for demand of petrol is inelastic.

b. It implies that ratio if there price change of coffee, demand of tea will decline.

c. Rise in income level triggers demand for holidays.

3. a. When price is set above equilibrium level, then there is excess supply. 

b. When there is rise in income level, demand curve shifts rightward. As a result, price in equilibrium level rises.

Price level can rise in case of constant demand when supply curve shifts leftward. 

4. a. demand for product B will rise. The demand curve shifts rightward.

b. There is decline in demand for product B as other substitute is available at low prices.

c. Demand for product B will rise when income level falls.

d. price of product B falls. As a result, demand will rise. 

e. demand for product B ill fall when price level rises. 

5. a. determinants of demand are listed under:

• Income level: when income level rises, demand for a particular commodity rises. 

• Tastes and preferences: when preferences and tastes of consumers change in favor of a particular good, then demand of that product rises. 

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