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[Econ] S4 law of demand

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原帖由 morrison600214 於 2015-5-17 01:43 AM 發表
Which of the following behaviour is consistent with the law of demand?
A. A removal of unemployment allowance decreases the employed population.
B. When the government increases the financial aid to ...
Did you learn the concept of "relative price"?

Otherwise, you will not know how to answer this kind of question.

However, if you learnt the relationship between total revenue and the price elasticity of demand, even you don't understand the concept of relative price, I can also tell you why option C is the answer.

1. Law of demand: P increase, quantity demanded decrease, vice versa, holding other factors constant.

2. Tax levied on red wine => Cost of production increases => => Quantity demanded decreases => if the price elasticity of demand is unitarily elastic i.e. PED = 1 =>  Total expenditure will remains unchanged ($1000) but the price increases and quantity demanded decreases. For example, $5 x 200Q = $1000   , $10 x 100Q = $1000.

3. Remember, don't mix up total revenue and quantity demanded.

4. If you want to learn the concept of relative price, you can refer to 2015 HKDSE Economics Paper 1 M.C. question 18 and my suggested solutions here: http://lsforum.net/board/thread-259187-1-1.html
   
黎sir, 數學物理經濟組合科學(生物,物理)(化學,物理)奪取5**, 20年補習經驗.導師簡介:

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