I. CHOOSE THE CORRECT ANSWER:
1. There exists an indirect relationship between price and demand
2. Law of demand is only applicable to very low priced goods
3. One of the determinants of demand is taste and preference.
II. WRITE SHORT NOTE ON :
1. Alfred marshal’s law of demand:
The greater the amount to be sold the smaller must be the price at which it is offered.
In other words, the amount demanded increases with a fall in price and diminishes with a rise in price.
2. Law of supply:
As the price of the commodity rises, the quantity supplied is extended and as the price of the
commodity falls the quantity supplied is contracted. This is called the law of supply.
3. List out the determinants of supply:
- The determinants of supply are
- Production technology
- Prices of factors
- Prices of other products
- Number of producers
- Future price expectation
- Taxes and subsidies
- Non economic factors like natural calamities, war, epidemics etc.
III. WRITE IN A PARAGRAPH:
1. With the help of table explain.
The following demand schedule shows the inverse or indirect relationship between price and demand.
|PRICE (in Rs. )||DEMAND (in kg.)|
The above demand schedule shows the different quantities demanded at different prices by an individual consumer.
When the price of the mangoes is Rs. 25 per kg the consumer demands 1 kg.
When the price falls from Rs. 25 to Rs. 20, Rs. 15, Rs. 10 and Rs. 5, the consumer increases his demand from 1 to 2, 3, 4 and 5 kgs respectively.
This shows that with a fall in price the demand increases.
It indicates the indirect relationship between price and demand.