Question

Reflect on two occasions when the price of a good has changed, ceteris paribus, and you alter the amount you consume.

Answer 1

The two occasions when the change in the price of a good has altered the amount I consume, ceteris paribus are:

1. The price of onion normally ranges between 15-20 Rs./Kg. There were also a time when it was selling for 40-50 Rs./Kg. At that time I reduced the consumption of onion to a substantial extent. I did not consume it in the form of salad and also for cooking food I used a lesser qunatity of onion than I normally do.

2.During the time of sale when the price of the goods is reduced by 50 percent I purchase clothes in bulk. I purchase 15-20 clothes in a month during the time of sale when the prices are down. And when the sale is not there I sometimes purchase 1-2 clothes a month and sometimes I dont purchase any clothes in a month at all.