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Question
The following table shows a change in the demand. Read the table carefully and answer the question that follows:
| Case | Price (₹) | Quantity (kg) |
| I | 10 | 20 |
| 10 | 10 | |
| II | 10 | 20 |
| 5 | 20 |
What type of change is it - decrease in demand or contraction in demand? Give a reason.
Solution
Case I:
- The price remains constant at ₹10, but the quantity demanded decreases from 20 kg to 10 kg.
- This situation could indicate a decrease in demand due to factors other than price, such as a change in consumer preferences, a decrease in income, or the availability of substitutes.
- It shows a decrease in demand without a change in price.
Case II:
- The quantity demanded remains constant at 20 kg, even though the price decreases from ₹10 to ₹5.
- This suggests that the demand for this good is inelastic in this case, meaning that consumers' quantity demanded does not significantly change despite the price drop.
- It demonstrates that demand is not responsive to a price decrease, which indicates inelastic demand.
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The following table shows a change in the demand. Read the table carefully and answer the question that follows:
| Case I | Case II | ||
| Price (₹) | Quantity | Price (₹) | Quantity |
| 10 | 20 | 10 | 20 |
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