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Question
In which exception to the law of demand does the consumer equate price and quality.
Options
Bandwagon Effect
Veblen Effect
Giffen Effect
Conspicous consumption
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Solution
Veblen Effect
APPEARS IN
RELATED QUESTIONS
Explain briefly anyone determinant of an exceptional demand curve.
State with reason whether you agree or disagree with the following statement:
When the price of Giffen goods falls, the demand for it increases.
State with reason whether you agree or disagree with the following statement:
There are no exceptions to the law of demand.
PASSAGE
Mona visits a shopping mall near her residence. She shops for monthly groceries which include rice, wheat, sugar, cooking oil and pulses. She purchases additional quantities of sugar much more than her monthly requirement anticipating that prices may rise in the coming days due to festivities.
She observes two different qualities of tur dal out of which one quality is inferior and the other is superior. She does not purchase the low quality tur dal even though its price is comparatively lower. Instead she prefers to buy superior quality tur dal.
- Identify the exception to the law of demand in the given passage with reference to purchase of additional quantities of sugar much more than monthly requirement anticipating that prices may rise in the coming days due to festivities (1mark)
- Identify the kind of good with reference to low quality tur dal (1mark)
- Express your personal opinion based on the above information. (2 marks)
State with reason whether you agree or disagree with the following statements:
When price of Giffen goods fall, the demand for it increases.
State with reason whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
“The inverse relationship between price and quantity demanded does not hold good in many cases.”
- Justify the above as Yes or No.
- If justified, explain in brief the Giffen Effect.
State two circumstances under which the demand curve slopes upwards to the right.
What are Giffen goods?
What happens to the demand for necessities like salt or electricity when their prices increase?
