Eco Mid Term 24 PDF

1. Explain the difference between a change in quantity demanded and a change in demand for a commodity with the help of a diagram. 2. Write a concise note on exceptions to the Law of Demand. 3. Suppose you read in today’s newspaper that carrot prices have soared because more carrots are bein...

1. Explain the difference between a change in quantity demanded and a change in demand for a commodity with the help of a diagram. 2. Write a concise note on exceptions to the Law of Demand. 3. Suppose you read in today’s newspaper that carrot prices have soared because more carrots are being demanded. Then tomorrow, you read that the rising price of carrots has greatly reduced the typical consumer demand for carrots as consumers have switched to potatoes and peas. The two statements appear to contradict each other. The first associates a rising price with rising demand; while the second associates a rising price with a declining demand. Comment. 4. Do comment on the below given diagram: 5. A Swiss-American multinational cigarette and tobacco manufacturing company, with products sold in over 180 countries. In 2018, it cut its  cigarette prices by 18%. Due to this decrease in price, their quantity sold increased by 12.5%, as there is an inverse relationship between price of the product and demand of the product. Later in 2019, it was found out that profits of Cigarette Company fell by 25% due to this bad pricing strategy. Now the question arises why profits fell despite increase in units sold. Explain. 6. Write the formula for Cross elasticity of Demand and explain it briefly; also match the following columns correctly:- Column I Column II Cross Elasticity ( ec ) > 0 goods are independent Cross Elasticity ( ec ) < 0 goods are substitutes Cross Elasticity ( ec ) = 0 goods are complementary 7. Briefly explain the relationship between TP, MP, and AP curves with the help of daigram 8.