Advertisements
Advertisements
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.
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
Complete the following statement:
Symbolically, the functional relationship between Demand and Price can be expressed as ______.
Find the odd word
Assumptions to law of demand -
Increase in demand is caused by
Distinguish between extension and contraction of demand.
State with reason whether you agree or disagree with the following statement :
When price of Giffen goods fall, the demand for it increases.
Any statement about demand for a good is considered complete only when the following is/are mentioned in it:
If a good is inferior good, then purchases of that good will decrease when ______.
Identify the correct statement from the following alternatives:
The following table shows the amount of sugar bought by a household at different prices:
| Period | Price (₹ per kg) | Amount Bought (kg) |
| Jan. 2000 | ₹ 15 | 4 |
| Feb. 2000 | ₹ 16 | 5 |
Does the behaviour of household contradict the law of demand? Give reasons in support of your answer.
State whether the following statement is true or false. Give reasons.
The law of demand states a direct relationship between price and demand.
