Download Chapter III Demand Analysis = × = × = ×

Lecturer: Ravi D. Naik
PUC-II
Adarsha Shikshan Samiti’s
ASS’s PU College of Commerce-Gadag
Subject: Economics
1and 2 Marks Q & A
[email protected]
Chapter III
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Demand Analysis
What is demand?
Ans: The quantity of a good that a consumer purchases in a market at a particular
price, at a particular time is called demand.
State the law of demand.
Ans: The law of demand states that other things remaining constant, when the price of
good decreases, the demand for it increases and when the price increases, the demand
for the good decreases.
What do you by demand function?
Ans: The demand function shows the relationship between the quantity demanded and
its determinants.
What do you mean by normal good?
Ans: There are some goods for which when the consumers income increases, demand
increases and income increases demand increases those goods called normal good. Here
there is a direct relationship between income and demand.
What do you mean by inferior good?
Ans: There are some goods for which when the consumers income increases, demand
decreases and income decreases demand increases those goods called Inferior good.
What do you mean by Giffen paradox?
Ans: It’s coined by Sir Robert Giffen. He says that Giffen paradox means demand is
increases with a rise in price or decreases with a fall in price.
Give the meaning of elasticity of demand.
Ans: The responsiveness of demand to a change in one of its determinants, while other
determinants remain constant.
What do you mean by demand function?
Ans: The demand function shows the relationship between the quantity demand and its
determinants. Qd= f (P, Pr, Y, T)
What do you mean by price elasticity of demand?
Ans: The responsiveness of demand for a goods changes in its price with other things
remaining constant.
=
×
10.
What do you mean by Income elasticity of demand?
Ans: The responsiveness of demand for a goods changes in income of consumer with
other things remaining constant.
=
×
11.
What do you by cross elasticity of demand?
Ans: The responsiveness of demand for good A to change in price of good B with other
things remaining constant.
=
×
1
12.
Qd=20-2p
2p is a demand equation. Identify independent variable, dependent,
constant and co-efficient
efficient in it.
Ans: Qd= Dependent variable, 20,
20 -2=
= constant, p= Dependent variable
variable, -2 is coefficient
13. Qd=30-2p
2p is demand function of onion. Suppose the price of onion in the
market is Rs. 10 per kg. Calculate the quantity demanded.
Ans: Qd=30-2(10)
=30-20
=10
so the quantity demanded is 10. Att price Rs.10
14. Why does the demand curve slope downwards?
Ans: Demand
emand curve slope downwards because of the following four factors.
Price, Income, Substitution effect and the law of diminishing marginal utility. For
example in ‘Price effect’.. When price of a good decreases, the good becomes cheaper.
Then the consumer buys more of the good.
15. What do you mean by complementary goods? Give examples
Ans: Complementary goods means goods which are consumed together to satisfy a want
are called complementary goods. The relationship between the price of a good and
demand for its complementary good is inverse. Example, pen and ink, tea and sugar,
bike and petrol.
16. Consider the demand for onion. At Rs.10/ kg, demand for onion is 15 kgs.
Suppose the price increases Rs. 20/kg., the demand decr
decreases to 10 kgs.
Calculate the price elasticity of demand.
Ans: Δq = 15 20 = 5, Δp
p = 10 20 = 10
=
×
=
×
=
0.33. Hence Price elasticity of demand is <1
Calculate the market demand for the good from the given demands of X and Y
market and draw the market demand curve
17.
Price
X’s demand
Y’s demand
2
4
6
8
16
14
12
10
20
18
15
12
Market
demand
36
32
27
22
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