1968-03-17 — Page 24

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日九十月二年甲戊腊室 WAH KIU YAT PO # A 傷

英文中學會題預習専欄

經濟及公共事務科 (二十)

劉奇敏

Economie & Public Affairs

Lecture No. 20

By K.M. Lau, J.

Answers to questions in Kierciäe No. XVII

Question: (1) What do you understand by-elasticity

and inelasticity of demand? What are the factors affecting elasticity of demand? Mention one commodity that has an elastic demand and another that haa

an inelastic demand, and justify your choice of commodities.

The extent to which the price of a commodity can affect the quantity of the commodity to be demanded to known as the elasticity and inelasticity of demand.

Demand is said to be elastie ir a change in price, however slight it my be, causes a great change in the quantity of the commodity that is demanded, as graphically illustrated below:-

PRICE

when the price rises.

日期星

日七十月三年八六九一座公年七十五國民業中

The final factor that can affect the elasticity or demand is whether the amount apent on a

commodity is a small or a large percentage of a consumer's total expenditure. For instance, the amount of money one apends on sugar must be very little compared with money spent on other commodities

as a whole, ao that however great the change in the price of sugar 18, this changs of price does not affect the quantity of sugar to be damanded. Thys the demand for sugar is inelastic. But, the demand for motor-care is elastic, since the amount of money spent on them fores an enormous part of a person's total expenditure.

We say that coffee has an elastie demand, because if the price of coffee rises, consumers will buy tea or cocoa instead as they are all beverages and are very close substitutes.

We say pleasure boats have an inelastic demANG because the buying of them takes up a large part of the consumers' total expenditure. Besides, when they are expensive, fewer people will 'bur, but when they are cheap. more people will buy.

Question: (2) What do yêu chen by supply.

Answer:

Distinguish between elastic and inelastic supply, If price remind

constant, under what conditions can supply be changed?

In the economic sense, ty supply is meant the amount of a commodity that is offered in the market for sale at a given price and at a given time.

Supply is said to be elastic if a change in price produces a great change in the quantity that is to be supplied, as illustrated by the graph below:

公共圖

、中國語文學部、哲日內公佈。 1,部啞,其中中國整,必須經過一國際知名,須另檄 馊酴变百 工商管理學部及化學 曝中得出號召試,惟及化學,研究生每年三十日前緻湖。〔 學學部、地理學部、 闰住本務以外之期惜始將被交。地理,還安陽兵四月 ,計有中國歷史學部 河驗,其他細節將於 對一個J前 1元,可分两次於每寕'往院取醤名格

(1958

申請

九年之研究, 生於鉬業調滿樹 事 中央研究院。

一天,名酒晶,可免試 九

業者,可塑碩士學

安利六殴,

【位。今年招生之琳項入粵試將包括英

六日立傑:慈院現 文大學研究院昨〔十文學組兩類。 日

申鳍免試時颃很嫩。目前特考劼學命者: 開始接受本年入學或將於今夏花得大學 (R>###XEROEPEN, NXT=5ED •F]F = R• SKID#} 者 均可申請入學 四月三十日截止報名 共有六個部門 大學畢業或將於今夏畢業 凡特有大學學位 修鰌内內之科目者。保默念一百元。該院 ,所頖生可串蝰射用人

中文大學研究院開始 接受本年度入學申請

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打籽油、木材,聊入以汽車、電器用品、米、洗藏品。

§ 我話:位於爪哇區北岸中腳從實邊路望上,是些北部之重要,脚地宮網,人口 「新经;但無口水漆,輸出以更子·蕻然、花露 > 柚木、菸草、茶葉為大宗。

D洞水:一名味拉巴雅,弦乐蛙東北岸縱貫鐵路號上,外有馬都拉島屏障,是東爪哇 與雪堡商業中心,亦是印尼選一航薄之終點者及海軍鏌據地。主要輸出品為鄰糖、茶菜

、推理、你啡等,有懷石油及天

金安策;地方高,氣候良好,有世界帶一號會被物公開之稱。

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Demand is inelastic if a change in price, however great it is, produces a small, or no change at all in the quantity of the commodity that is demanded, as graphically illustrated below:-

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Supply is said to be inelastic ir ● erange price produces very little or no change in the quantity of a commodity that is tea be supplied, as

ustrated by the graph below

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Inelastic-Demand

Numerous factors are responsible for determining whether demand is slastic or inelastic,

Commodities which have close substitutes have

an elastic demand, because when one commodity risas in price, consumers will start to buy the other commodities instead. Butter and margarina ara examples of commodities that have an elastie demand since both are almost interchangeable.

The next factor is the degree of a consumer'a babit. If a consumer has formed a strong habit for one particular commodity (especially whan 12 does not have a close substitute) the demand for that commodity is inelastic. If a person has formed a habitual liking for cigarettes, it generally follows that nas demand for cigarattas is inelastic since he cannot

*

find another cl as substitute for cigarettes.

ir a comme ity is one which is necessarily neered by consulars and this commodity does not nave a substitute, the demand for it is invariably inelastic. Thus, the extent to which there is a necessity for a commodity will decide whether damaLTRE is elastic or inelastic.

The income of a consumer also plays an Aałkumo 54X rola in deciding who ther his demand for a commodity in elastic or elastic. The higher a person's income in, the more inelastia is his demani, for whether the price risas or falle be tends to buy almet the sam cosasičíte each time.

are nowever, a poor person will b fed the prior drops and baya lasë ne nothina

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If price remains constant, supply can still be influenced by other factors such as thora „discussed below.

Production costs do play a very important role in determining whether the quantity of a aqupodity that is supplied is to be increased or decreased." Higher coats of production would mean a decroses in supply, whereas cheaper costs of production would man a greater quantity of the commodity le ngjyr pur up for sale. The fact than Japanese manufacturers can cut down their production costs without affecting the total output of television sets, explains why our market, is flooded with Japanese television sets, There are however, few Rolls-Royce sars in Hong Kong because of their bicb oroduation soate.

Is the government introqyzen a dew tax or a higher tax on a particular commodity, the supply a that sommodity is decreased, whereas if an existing tax is removed or a drop in the tax of a commodity oòcure, a greater quantity of the commodity will be offered for sale,

Production maÉPOCA

proquation methods are improved, there will be a reduction in production sòsts, and this in turs

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would result in a greater quantity of the commoditɔ to be supplied. This explains why research has always been carried out to improve our production methods, so that a greater output would mean a greater, number of consumere would be able to enjoy what is produced in the country. The result will be that there is a higher standard of living for averyone.

Agricultural producte, on the other hand, are supplied according to changes in the weather, Ideal weather conditions would permit a better vield than DON' Veather · condisionin,

näergide No. XVIII

2. Explain the rivs laws of supply and demand-

Whačeva possible, illustrate your answer. "What do youngartsand by inter-rela ited damna}

Into to ASILI

inter-related demand.CALLS

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