Demand & Law of Demand

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  • Q1

    A decrease in income

    Marks:1
    Answer:

    increases demand for inferior goods.

    Explanation:
    There is an inverse relationship between the income of the consumer and demand of an inferior good. Consumers tend to buy less of an inferior good when they have more income and vice versa.
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  • Q2

    The graphical representation of
    the demand function is called

    Marks:1
    Answer:

    demand curve.

    Explanation:

    The graphical representation of
    the demand function is called the
    demand curve.

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  • Q3

    The effective desire to purchase a commodity is known as

    Marks:1
    Answer:

    demand.

    Explanation:
    Utility is the want satisfying power of the commodity. The desire to purchage a commodity backed by ability and willingness to purchase is known as demand.
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  • Q4

    The change in the optimal quantity of a good when its price changes and the consumer’s income is adjusted so that he can just buy the bundle that she was buying before the price change is called the

    Marks:1
    Answer:

    substitution effect.

    Explanation:

    The change in the optimal quantity of a good when its price changes and the consumer’s income is adjusted so that she can just buy the bundle that she was buying before the price change is called the substitution effect.

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  • Q5

    A change in quantity demanded as a result of change in real income due to change in price is called

    Marks:1
    Answer:

    price effect.

    Explanation:

    A fall in price increases the real income of a consumer with the result that he buys more when the price falls and vice-versa.This leads to change in quantity demanded with the same money income of the consumer.

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