The price of commodity increases from <10 to <14. Calculatepercentage fall in quantity demanded of the commodity if the coefficient of price elasticity of demand is (–) 1 �25.

OR

State whether the following statements are true or false. Give valid reasons in support of your answer.

(a) The coefficient of price elasticity of demand for the commodity is inversely related to the number of alternative uses of the commodity.

(b) Luxury goods often have a lower price elasticity of demand.

Discuss the relationship between total utility and marginal utility, using a hypothetical schedule.

With the help of the given schedule, determine the firm’s equilibriumusing marginal revenue -marginal cost approach. Give valid reasons in support of your answer.

Discuss briefly the meaning of ‘‘Price discrimination’’ and ‘‘Product differentiation’’ with the help of suitable examples.

OR

Is a firm under perfect competition a price taker, or a price maker?Justify your answer.

Suppose a consumer whose budget is <500, wants to consume only two goods, Good X and Good Y. The goods are respectively priced at <50 and <25.

Answer the following questions based on the given information :

(a) State the budget equation of the consumer.

(b) What is the slope of the budget line?

(c) How many units can she purchase if she spends the entire <500 on Good X?

(d) How many units can she purchase if she spends the entire <500on Good Y, given that the price of good Y has doubled?

OR

‘‘For a consumer to be in equilibrium position, marginal rate of substitution between the two goods must be equal to the ratio of prices of

the two goods.'' Do you agree with the given statement? Justify your answer.