Advertisements
Advertisements
Questions
Explain with reason, whether you agree or disagree with the following statement.
Price is the only determinant of demand
Price is the only factor that affects demand of a commodity.
State with reasons whether you agree or disagree with the following statement:
Price is the determinant of demand.
Options
Agree
Disagree
Solution
No, I do not agree with the given statement. This is because there are various factors that determine demand other than price.
Reason:
The following are a few determinants:
- Price: Price is one of the most basic factors influencing market demand. Typically, more quantities are demanded at lower prices, and vice versa.
- Income: Income is an additional factor that affects market demand. Consumers' purchasing power is affected by their income. Income and demand are directly connected. Normally, rising income leads to increased demand, and vice versa.
- Prices of Substitute Goods: The prices of substitute goods influence market demand. When a cheaper one is available, people desire it more than the original commodity. For example, if the price of tea declines, demand for coffee tends to decrease.
- Prices of Complementary Goods: The costs of complementary items have an impact on market demand. If the price of a complementary good rises, the demand for the commodity in issue falls. For example, if the price of gas rises, demand for transportation decreases.
RELATED QUESTIONS
What happens to the demand of a good when consumer's income changes? Explain
Show that demand of a commodity is inversely related to its price. Explain with the help of utility analysis.
Explain any two causes of ‘increase’ in demand of a commodity.
Explain the inverse relationship between price and quantity demanded of a commodity.
Explain in detail the determinants of demand.
Identify the correct pair of items from the following Columns I and II:
| Columns I | Columns II |
| (1) Price Floor | (a) Government imposes below the equilibrium price. |
| (2) Price Ceiling | (b) It is the maximum price, the producers of goods or services are allowed to charge. |
| (3) Price Floor | (c) Government does it in the interest of consumers. |
| (4) Price Ceiling | (d) Government imposes lower limit on the price, which is higher than the equilibrium price. |
Which of the following is the determinant of market demand?
Find the odd word out:
Determinants of decrease in demand:
