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प्रश्न
What is meant by the income effect of a fall in the prices of a commodity?
Explain how income effect is responsible for the negative slope of the demand curve.
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उत्तर
A change in demand due to change in real income resulting from change in the price of a commodity is known as the income effect. For example, a fall in the price of a commodity increases 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 given money income. Accordingly demand for the commodity increases.
संबंधित प्रश्न
Briefly explain any two reasons for the occurrence of the law of demand.
Symbolically, the functional relationship between Demand and Price can be expressed as ______.
The Law of Demand was introduced by ______.
Distinguish between extension and contraction of demand.
If a good is inferior good, then purchases of that good will decrease when ______.
Pick the option which does not belong to the group:
State the law of demand.
Identify the correct statement from the following alternatives:
According to the Law of Demand, what happens when the price of a commodity decreases, assuming no other factors change?
Which formula correctly expresses the factors that determine the demand for a commodity?
