INDIVIDUAL ASSIGNMENT

COURSE: INTRODUCTION TO AGRICULTURAL ECONOMIC

NAME:SARJO JAWO
MAT# 22115146
1.State the Law of Demand: The law of demand states that other factors being constant (cetris peribus),
price and quantity demand of any good and service are inversely related to each other. When the price of
a product increases, the demand for the same product will fall.

Description: Law of demand explains consumer choice behavior when the price changes. In the market,
assuming other factors affecting demand being constant, when the price of a good rises, it leads to a fall in
the demand of that good. This is the natural consumer choice behavior. This happens because a consumer
hesitates to spend more for the good with the fear of going out of cash.
QUESTION2.
Data
Q1⁼1000
Q2⁼1500
P1⁼1.50
P2⁼1.00
SOLUTION
Q2 ₋ Q 1× P 1
EP⁼
P 2₋ P1 × Q 1
1000 1.50
⁼1500− ¿ × ¿
1.00 −1.5 1000
500 1.50
×
−0.5 1000
¿1000¿ 0.00
Answer EP¿−1.5
 QUESTION 3.
Q1⁼90
Q2⁼110
P1⁼1.20
P2⁼0.80
SOLUTION

¿ Q 2− ¿ ¿
EP Q1 P1
P2−¿ × ¿
P1 Q 1

110− ¿ ¿
90 1.20
0.80−¿ × ¿
1.20 90
20 1.20
¿ ×
−0.4 90
¿ 5 O× 0.0133
E.P ANSWER¿−0.67

4. State the Engel’s Law: Engel’s Law states that as household income rises, the percentage of income
spent on food declines. Therefore, households at the lowest income levels spend more of their income on
food to sustain life than wealthier households.

5.What is Cross-price elasticity:The cross-price elasticity represents the rate of change in response to
demand for one offering as it relates to a price change in another offering. Businesses and organizations
rely on the cross-price elasticity formula for calculating this ratio to better understand the market they
serve.

With the formula cross-price elasticity (XED) = (% change in demand of product A) / (% change of price
of product B), you can evaluate the relationship between quantity of demand and selling price. In this
article, we'll discuss the cross-price elasticity formula, how to use it and how to interpret the results from
your calculations.
Cross price elasticity (XED) = (% change in demand of product A) / (% change of price of product B),
where products A and B are different offerings.

REFERENCES
By JASON FERNANDO Updated March 13, 2023 Reviewed by MICHAEL J BOYLE
Fact checked by KATHARINE BEER
By Stephanie Bolling Updated on April 19, 2022 Reviewed by Pamela Rodriguez
By O.A. IWENA,Essential Agriculture Sixth Edition 2012.