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प्रश्न
Write Explanatory answer.
State and explain the law of demand with its exception.
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उत्तर
Meaning: -The Law of demand establishes the functional relationship between the Price of a commodity and the quantity of that commodity demanded at different prices, assuming other factors remaining constant.
When the price of a commodity rises, demand for it falls and when the price of the commodity falls, demand rises. So less quantity is demanded at higher prices and more quantity is demanded at lower prices. There exist inverse relationship between price and quantity demanded of a commodity.
Definition: -According to Marshall the law of demand, is defined as “Other things being equal, the quantity of a commodity demanded varies inversely with its price.”
Symbolically, the Law of demand can be expressed as follows:
Dx = f (Px)
Where, D = stands for the demand for commodity X
X stands for the commodity demanded
F stands for function of
Px stands for the price of the commodity X
We can explain this law with the help of a schedule and a diagram.
| Price (Rs.) | Quantity Demanded |
| 1 | 50 |
| 2 | 40 |
| 3 | 30 |
| 4 | 20 |
| 5 | 10 |
The Schedule shows that with an increase in Price the quantity demanded is decreasing. It indicates inverse relationship between the two variables price and quantity demanded. When the price is Re. 1 the consumer demand 50 units and when the price rises to Rs. 5 he demands the least that is 10 units.
In the above diagram X-axis represents quantity demanded and Y-axis represents price. Various points from the schedule are plotted on the graph, joint those points we will be getting demand curve. DD is the demand curve which slopes downward from left to right indicating inverse relationship between price and Quantity demanded. This happens when the price is more, demand is less and when price is less, and demand is more.
- Giffen goods or inferior goods-Giffen Paradox: -Inferior goods are those goods whose demand does not rise even if their price falls. At times, the demand decrease, when the price of such gods falls. Sir Robert Giffen discovered this behaviour in England in relation to inferior goods such as bread. Therefore inferior goods are named after Giffen and they called ‘Giffen Goods’.
- Prestige Goods: There are certain goods and services, which represent ‘Status’ of ‘Prestige’for the people. Demand for these commodities is more when the price is more.
- Anticipation of changes in price: -If people anticipate a further rise in price, they may buy more at the existing higher price. Likewise, if people anticipating a further fall in price, they will not buy more even at the existing lower prices. They will wait for the price to fall further.
4. Price Illusion: -There is a belief among the people that the higher is the price, the better is the product and accordingly the greater is the demand for such goods.
- Changes in fashion: The law of demand may not work, if there is change in fashion. For example, if a product goes out of fashion and its price falls down, people will not buy more of it even at very low prices.
- Promotional activates: - Promotional activities such as advertising and salesmanship undertaken by seller can make the people buy more even at high prices.
- Changes in quality: if there is a change in the quality of the product, the law of demand may not apply. For instance, if there is improvement in quality of the product, some people my demand more even at higher price.
संबंधित प्रश्न
Demand for necessaries is................
(elastic / inelastic / infinitely elastic / unitary elastic)
Explain, with reasons, whether you Agree or Disagree with the following statement
There are no exceptions to the Law of Demand.
| Group 'A' | Group 'B' | ||
| a. | Pen and ink | 1 | Quantity-price |
| b. | Revenue | 2 | Accident |
| c. | Insurable risk | 3 | Transfer income |
| d. | Unemployment allowance | 4 | Short period |
| e. | Reverse repo rate | 5 | Long period |
| 6 | Change in demand | ||
| 7 | Joint demand | ||
| 8 | Quantity * price |
Demand curve and Supply curve.
What is meant by inelastic demand?
Compare inelastic demand with perfectly inelastic demand.
The demand of a commodity, when measured through the expenditure approach, is inelastic. A fall in its price will result in : (choose the correct alternative)
(a) No change in expenditure on it.
(b) Increase in expenditure on it.
(c) Decrease in expenditure on it.
(d) Anyone of the above.
Explain the problem of what to produce.
Demand for a good is termed inelastic through the expenditure approach when if (choose the correct alternative)
a) Price of good falls, expenditure on it rises
b) Price of the good falls, expenditure in it falls
c) Price of the good falls, expenditure on it remains unchanged
d) Price of the good rises, expenditure in it falls
Distinguish between ‘increase in demand’ and increase in quantity demanded of a good.
Demand deposits include (choose the correct alternative)
(a) Saving account deposits and fixed deposits
(b) Saving account deposits and current account deposits
(c) Current account deposits and fixed deposits
(d) All types of deposits
When the income of the consumer falls the impact on a price-demand curve of an inferior good is: (choose the correct alternative)
a. Shifts to the right.
b. Shifts of the left.
c. There is upward movement along the curve.
d. There is downward movement along the curve
State the factors leading to fall in demand by an individual consumer
Demand for electricity is elastic.
Give reason or Explain the following statement :
Demand for habitually used goods is inelastic.
Explain the following concept:
Effective demand
State whether the following statement is True or False :
Demand for necessary goods is inelastic.
State with reason. Whether you ‘agree’ or ‘disagree’ with the following statement:
There are no exceptions to the law of Demand.
Fill in the blank with proper alternatives given in the bracket:
Indirect demand is also known as _______ demand.
State whether the following statement is true or false.
Perfectly inelastic demand curve is parallel to ‘X’ axis.
Write short answer for the following question.
Explain the Law of Demand.
State and explain the law of demand.
Write whether the following statement is True or False:
Demand curve has a positive slope.
Write whether the following statement is True or False:
Demand for commodities depends upon various factors.
Write whether the following statement is True or False:
Salt has elastic demand.
Distinguish between :
Individual demand schedule and Market demand schedule.
Fill in the blank with appropriate alternatives given in the bracket:
The law of demand states ________ relation between demand and price.
fill in the blank with appropriate alternatives given in the bracket:
Demand for salt is ___________.
Write the answer in ‘one’ or ‘two’ paras.
What are the main determinants of aggregate demand?
Fill in the blank with appropriate alternatives given below:
When the price of petrol goes up, demand of cars will ___________.
Fill in the blank with appropriate alternatives given below:
Market demand is an aggregate of purchasing by _________ buyers.
Fill in the blank with appropriate alternatives given below:
Indirect demand is also known as _____________ demand.
Match the following:
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Group A
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Group B
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1. Demand and price
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a. Substitute goods
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2. Tea and coffee
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b. Inverse relation
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3. Inferior goods
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c. Joint demand
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4. Factors of production
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d. Distribution of income
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5. Pen and ink
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e. Composite demand
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f. Giffen goods
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g. Indirect demand
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State whether the following statement is TRUE and FALSE
When demand increases, the demand curve shifts to the left.
State whether the following statement is TRUE and FALSE
Law of demand is explained by Prof. Robbins.
State whether the following statement is TRUE and FALSE
Individual demand is a demand by single buyer.
Define the following concept:
Derived demand
What do you mean by demand?
Fill in the blank using appropriate alternatives given below
The demand for perishable goods is _______
Answer the following question.
Discuss the relationship between the income of the consumer and demand for a commodity with respect to normal goods, inferior goods, and necessities.
Distinguish between substitute goods and complementary goods, with examples.
State whether the following statement is true or false. Give reasons for your answer :
X and Y are complementary goods. A fall in the price of Y will result in a rise in the price of X.
Good X and Good Y are substitute goods. If price of Good X increases, discuss briefly its likely impact on the demand for Good Y.
In case of ______ supply curve is a vertical straight line parallel to Y-axis.
If the price of good X rises and it leads to an increase in demand for good Y, both are ______ goods.
We say that there is a decrease in demand when ______
Which of the following points relates to the transaction demand for money?
There is a sudden change in climatic conditions resulting in hot weather. Assuming no change in the price of the cold drinks, it will lead to ______
Law of demand states the ______ relationship between price and quantity demanded.
Identify the correct pair of items from the following Columns I and II:
| Column I | Column II |
| (1) Utility | (a) Bread and butter |
| (2) Normal Goods | (b) Rise in price |
| (3) Contraction in demand | (c) Capacity of a commodity to satisfy human wants. |
| (4) Complementary goods | (d) Positively related |
Identify the correct pair of items from the following Columns I and II:
| Column I | Column II |
| (1) Budget Line | (a) Normal goods |
| (2) Bajra | (b) Inferior goods |
| (3) Consumer equilibrium | (c) Luxurious goods |
| (4) Elastic Demand | (d) M = Px*x + py*y |
Area under MC curve is equal to:
Which of the following can cause an increase in demand:
Identify the two cost curves which start from the same point on the Y-axis.
Aggregate demand can be decreased by:
Which of the following statements is correct with respect to the correction of Excess Demand?
Which of the following is correct?
Which of the following statements is true?
Which of the following statements is true?
Read the following news report and answer the Q.97-Q.100 on the basis of the same:
The quantity of a commodity that a consumer is willing to buy and is able to afford, given the prices of goods and the consumer's tastes and preferences is called demand for the commodity. Whenever one or more of these variables change, the quantity of the good Chosen by the consumer is likely to change as well. The relation between the consumer's optimal choice of the quantity of a good and its price is very important and this relation is called the demand function. Thus, the consumer's demand function for a good gives the amount of the good that the consumer chooses at different levels of its price when the other things remain unchanged.
Assertion: The income of the consumers remains unchanged
Reason: Commodity should be a normal good.
Select the correct alternative from the following.
Read the following news report and answer the Q.97-Q.100 on the basis of the same:
The quantity of a commodity that a consumer is willing to buy and is able to afford, given the prices of goods and the consumer's tastes and preferences is called demand for the commodity. Whenever one or more of these variables change, the quantity of the good Chosen by the consumer is likely to change as well. The relation between the consumer's optimal choice of the quantity of a good and its price is very important and this relation is called the demand function. Thus, the consumer's demand function for a good gives the amount of the good that the consumer chooses at different levels of its price when the other things remain.
In which of the following cases there will be leftward shift in demand?
Read the following news report and answer the Q.97-Q.100 on the basis of the same:
The quantity of a commodity that a consumer is willing to buy and is able to afford, given the prices of goods and the consumer's tastes and preferences is called demand for the commodity. Whenever one or more of these variables change, the quantity of the good Chosen by the consumer is likely to change as well. The relation between the consumer's optimal choice of the quantity of a good and its price is very important and this relation is called the demand function. Thus, the consumer's demand function for a good gives the amount of the good that the consumer chooses at different levels of its price when the other things remain.
The price elasticity of demand for a good depends on ______ and ______ of the good.
The demand curve of a firm under monopoly is ______
When the price of the commodity has changed the demand for the commodity changes in ______
Read the case study and answer the questions 97 to 100:
The Coca-Cola Company is an American multinational beverage company, with its headquarters in Atlanta, Georgia. The first company that conducted its operation in the soft drink industry was Coca-Cola. It is the world's largest non-alcoholic beverage company serving more than 1.8 billion consumers daily in more than 200 countries. It has a portfolio of more than 3,500 (more than 800 no or low-calorie) products. However, the company is best known for its flagship product Coca-Cola which was originally intended to be a patented medicine invented in 1886 by pharmacist John Smith Pemberton in Columbus, Georgia. The Coca-Cola products can be termed as normal goods and in August 2019 Coca-Cola introduced a new product into the market, that is, zero sugar where the demand has increased for the product in the market.
According to the council of the Australian Food Technology Association and Institute of Food Science and Technology, the Australian nonalcoholic beverages industry has been growing steadily, with a 2.3 percent increase in overall production in the year 2000 which amounts to 2.25 billion liters. However, in the re~ent years, sales of customary carbonated soft drinks have dropped as more and more customers become health conscious and move away from high-calorie sugary drinks. Soft Carbonated drinks. and other alcohol-free beverage manufacturers have also sensed the effects of intensifying competition from private-label soft drink makers. Nevertheless, sales of greater value energy and sports drinks have driven profit generation in the industry.
The demand for Coca-cola is ______ in the present times.
Read the case study and answer the questions 97 to 100:
The Coca-Cola Company is an American multinational beverage company, with its headquarters in Atlanta, Georgia. The first company that conducted its operation in the soft drink industry was Coca-Cola. It is the world's largest non-alcoholic beverage company serving more than 1.8 billion consumers daily in more than 200 countries. It has a portfolio of more than 3,500 (more than 800 no or low-calorie) products. However, the company is best known for its flagship product Coca-Cola which was originally intended to be a patented medicine invented in 1886 by pharmacist John Smith Pemberton in Columbus, Georgia. The Coca-Cola products can be termed as normal goods and in August 2019 Coca-Cola introduced a new product into the market, that is, zero sugar where the demand has increased for the product in the market.
According to the council of the Australian Food Technology Association and Institute of Food Science and Technology, the Australian nonalcoholic beverages industry has been growing steadily, with a 2.3 percent increase in overall production in the year 2000 which amounts to 2.25 billion liters. However, in the re~ent years, sales of customary carbonated soft drinks have dropped as more and more customers become health conscious and move away from high-calorie sugary drinks. Soft Carbonated drinks. and other alcohol-free beverage manufacturers have also sensed the effects of intensifying competition from private-label soft drink makers. Nevertheless, sales of greater value energy and sports drinks have driven profit generation in the industry.
The demand. for coca-cola has ______
Read the case study and answer the questions 97 to 100:
The Coca-Cola Company is an American multinational beverage company, with its headquarters in Atlanta, Georgia. The first company that conducted its operation in the soft drink industry was Coca-Cola. It is the world's largest non-alcoholic beverage company serving more than 1.8 billion consumers daily in more than 200 countries. It has a portfolio of more than 3,500 (more than 800 no or low-calorie) products. However, the company is best known for its flagship product Coca-Cola which was originally intended to be a patented medicine invented in 1886 by pharmacist John Smith Pemberton in Columbus, Georgia. The Coca-Cola products can be termed as normal goods and in August 2019 Coca-Cola introduced a new product into the market, that is, zero sugar where the demand has increased for the product in the market.
According to the council of the Australian Food Technology Association and Institute of Food Science and Technology, the Australian nonalcoholic beverages industry has been growing steadily, with a 2.3 percent increase in overall production in the year 2000 which amounts to 2.25 billion liters. However, in the re~ent years, sales of customary carbonated soft drinks have dropped as more and more customers become health conscious and move away from high-calorie sugary drinks. Soft Carbonated drinks. and other alcohol-free beverage manufacturers have also sensed the effects of intensifying competition from private-label soft drink makers. Nevertheless, sales of greater value energy and sports drinks have driven profit generation in the industry.
______ is the want to buy a product backed by purchasing power.
Read the case study and answer the questions 97 to 100:
The Coca-Cola Company is an American multinational beverage company, with its headquarters in Atlanta, Georgia. The first company that conducted its operation in the soft drink industry was Coca-Cola. It is the world's largest non-alcoholic beverage company serving more than 1.8 billion consumers daily in more than 200 countries. It has a portfolio of more than 3,500 (more than 800 no or low-calorie) products. However, the company is best known for its flagship product Coca-Cola which was originally intended to be a patented medicine invented in 1886 by pharmacist John Smith Pemberton in Columbus, Georgia. The Coca-Cola products can be termed as normal goods and in August 2019 Coca-Cola introduced a new product into the market, that is, zero sugar where the demand has increased for the product in the market.
According to the council of the Australian Food Technology Association and Institute of Food Science and Technology, the Australian nonalcoholic beverages industry has been growing steadily, with a 2.3 percent increase in overall production in the year 2000 which amounts to 2.25 billion liters. However, in the re~ent years, sales of customary carbonated soft drinks have dropped as more and more customers become health conscious and move away from high-calorie sugary drinks. Soft Carbonated drinks. and other alcohol-free beverage manufacturers have also sensed the effects of intensifying competition from private-label soft drink makers. Nevertheless, sales of greater value energy and sports drinks have driven profit generation in the industry.
What has happened to the demand of zero sugar carbonated drinks?
In an open economy, Aggregate Demand is estimated as:
Demand deposits include:
Identify the correctly matched pair of the items in Column A to that of Column B.
| Column A | Column B | ||
| (1) | Increase in demand for goods | (a) | Leftward shift in the demand curve |
| (2) | Decrease in demand | (b) | Perfectly Elastic Demand |
| (3) | Ed = ∞ | (c) | Increases in the income of the consumer |
| (4) | Downward Sloping | (d) | Income elasticity of Demand |
The figure given below shows the relation between the quantity demanded for the good X and the price of the good Z. What type of goods are X and Z?
Milk is used for making curd, sweets and chocolates.
What type of demand does milk have? Give a reason.
Read the passage given below and answer the questions that follow.
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In India, Fixed deposits have long been a favourite investment choice of people, especially senior citizens, as it promise steady returns. It attracts those who are seeking a stable income. But it’s an illusion in the period of inflation. Inflation is the rate at which the general level of prices for goods and services rises, subsequently eroding the purchasing power of money. In simple terms, what money could buy today might not a few years down the line. Fixed deposits are financial instruments offered by banks where you deposit a lump sum amount for a fixed period at a predetermined rate of interest. Consider an investment of Rs 1 crore in a fixed deposit at a 6% annual interest rate and the annual rate of inflation is 5%. By the 10th year your pre inflation return is 1.79 crore, but post inflation it’s just 1.10 crore. The nominal value of investment in fixed deposits may appear to grow, inflation significantly diminishes their real value and purchasing power over time.
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- What is the theme of the extract? (2)
- Differentiate between Demand pull and Cost push inflation. (2)
- What are the demand deposits and time deposits? (2)
- Since 1998 RBI has been using new measures of money supply, M0, M1, M2 and M3. Which one of these measures incorporates fixed deposit as one of its components? Mention the other components of that measure. (2)
Which of the following best describes 'desire' in economics?
What is necessary for want to become demand?
Demand must always be expressed along with ______.
“I want a car but do not have money to buy it.” In economics, this statement refers to ______.
Which of the following is a flow concept associated with demand?
Micro view of demand relates to ______.
Aggregate demand in macroeconomics includes ______.
The formula for demand can be written as ______.
