Download App

Demand — Economics STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsDemand2 Marks
Question
Give the reason behind the inverse relationship between price and demand. Or why demand expands with a fall in price?
✓

Answer

  • The price and demand are inversely related because of income and substation effect.
  • The fall in price of a commodity make it m ore cheap compare to its substitutes.
  • Consumers reduce the demand for substitutes and increase the demand for commodity whose price has fallen.
  • This is because of substitutes and increases the demand for commodity whose price has fallen.
  • This is because of substitution effect.
  • The fall in price increases the real income of the consumer which in turn increases the demand for commodity.
  • This is due to income effect.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "2 Marks Each" from Demand→Demand — all question types→Economics STD 11 Commerce question papers→Gujarat Board STD 11 Commerce question papers→Gujarat Board question paper generator→

Similar questions

What is the different between price elasticity of demand and cross elasticity of demand ?
→
What is Balanced Budget ?
→
What is the difference between price elasticity of demand and income elasticity of demand ?
→
What is law of demand?
→
From the viewpoint of entry mention the position of various markets.
→
Explain the meaning and concept of liberalization.
→
What is Price Elasticity of demand?
→
Which commodities are called prestigious commodity ?
→
What is called national market?
→
Which commodities are called prestigious commodities?
→