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Questions
Mention one exception to the law of demand. Give one point only.
State two exceptions to the law of demand.
Explain three exceptions to this law of Demand.
Briefly explain one exception to the law of demand.
Solution 1
If the consumers expect a shortage or scarcity of a particular commodity in the near future, then they would start buying more and more of that commodity in the current period even if its price is rising.
Solution 2
- Prestige Goods: Many goods have prestige value, that is, they increase the status of consumers who own or use them. These are called prestige goods. Jewellers and fashionable clothing luxurious cars are examples of these prestige goods. The law of demand does not apply in the case of prestige goods. The demand for prestige goods is greater when their price is high. Such goods are mainly purchased because their price is high. A fall in their price may lead the rich people to buy less because now the rich men's desire for display is not satisfied. This exception was first explained by the American economist Veblen. So, prestige goods are known as Veblen goods.
- Ignorance: Sometimes, consumers think that high priced goods are better in quality. So, they buy more of the commodity at a higher price.
- Necessities: The law is not applicable in case of basic necessities of life such as medicines, food grains, salt etc. Minimum quantities of these goods have to be purchased whatever may be price, high or low.
APPEARS IN
RELATED QUESTIONS
Explain briefly anyone determinant of an exceptional demand curve.
Distinguish between:
Inferior goods and superior goods
State with reason whether you agree or disagree with the following statement:
When the price of Giffen goods falls, the demand for it increases.
Questions:
- Demand Curve D1D1indicates ______ (1m)
- Demand Curve D2D2indicates______ (1m)
- Name the above diagram and explain. (2m)
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Questions:
- Diagram’ A ‘represents _____in demand (1m)
- Diagram ‘B’ represents _____in demand (1m)
- In diagram ‘A’ movement of demand curve is in_____ direction (1m)
- In diagram ‘B’ movement of demand curve is in______ direction (1m)
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 statement:
When price of Giffen goods fall, the demand for it increases.
State with reasons whether you agree or disagree with the following statement:
There is a direct relationship between the price of Giffen goods and its demand.
State with reason whether you agree or disagree with the following statement.
When price of Giffen goods fall, the demand for it increases.
State with reason whether you agree or disagree with the following statements:
When price of Giffen goods fall, the demand for it increases.
'Price is an indicator of quality'. The statement applies to ______.
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.
State with reasons whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
State two circumstances under which the demand curve slopes upwards to the right.
Explain the following diagram with reference to the concept of Giffen goods.
The demand curve can slope upwards from left to right. Give one argument in support of this statement.
