Saturday 25 October 2008

additional exercise 1(rice)


a.What you expect the demand for rice to be price elastic or inelastic?
Inelastic.
b.Explain your answer to part (a),referring to the passage to provide evidence to support your explanation.
Rice is a staple commodity,forming a part of most people's daily diet.So the demand of rice is high=>%change in quantity demanded is smaller than % change in price=>price elastic of demand is inelastic.
c.Do you think that government to control prices would be effective answer to the problem?
I think the control of government is only a part of effect .There some example to control price:Poor households were coping with the price rises by changing their eating habits,by consuming less meat ,or by finding other ways of cutting down.

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