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प्रश्न
What is meant by the income effect of a fall in the prices of a commodity?
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उत्तर
A change in demand owing to change in real income arising from change in the price of a commodity is known as the income effect. For example, a decline in the price of a commodity improves the real income, i.e., the purchasing power of the given money income increases. The consumer can now afford to buy more of the commodity with his current salary. As a result, demand for the commodity increases.
संबंधित प्रश्न
Briefly explain any two reasons for the occurrence of the law of demand.
The Law of Demand was introduced by ______.
The movement on or along the given demand curve is known as ______
State with reason whether you agree or disagree with the following statement :
When price of Giffen goods fall, the demand for it increases.
State and explain the law of demand with the help of a hypothetical schedule and graph.
The following table shows the demand schedule for 3 consumers in a market.
| Price in (Rs) | Consumer 1 Demand in (kgs) | Consumer 2 Demand in (kgs) | Consumer 3 Demand in (kgs) | Market Demand |
| 10 | 1 | 2 | (i) ______ | 6 |
| 8 | 2 | (ii) ______ | 4 | 9 |
| 6 | 3 | 4 | 5 | 12 |
| 5 | 4 | 5 | 6 | (iii) ______ |
Based on the above hypothetical schedule answer the following questions.
- What is the demand of Consumer 3 priced at Rs 10 (i)
- What is the demand of Consumer 2 priced at Rs 8 (ii)
- Calculate the total market demand priced at Rs 4 (iii)
- From the above given table examine the relationship between price and demand.
- Mention any one exception to the law of demand.
When at a price of ₹ 5 per unit of a commodity, A’s demand is for 11 units, B’s demand is for 14 units and C’s demand is for 8 units (assuming that there are only three consumers in the market), the market demand is ______.
Giffen goods are richman's goods
Explain four circumstances under which the law of demand does not operate.
Which of the following is NOT an assumption of the Law of Demand ?
