Theory of Demand

Question 1

What is demand?

Answer 1

Demand means desire for a commodity backed by purchasing power

Question 2

The income demand curve is positively sloped in case of …………………. goods

Answer 2

normal goods

Question 3

The income demand curve is negatively sloped in case of ……………….. goods

Answer 3

inferior

Question 4

The income demand curve is ……………….. in case of normal goods

Answer 4

positively sloped

Question 5

The income demand curve is ………………….. in case of inferior goods

Answer 5

negatively sloped

Question 6

Cross demand curve for substitute goods is …………….

Answer 6

positively sloped

Question 7

Cross demand curve for complementary goods is …………….

Answer 7

negatively sloped

Question 8

Cross demand curve for ………………… goods is positively sloped

Answer 8

substitute goods

Question 9

Cross demand curve for …………………… goods is negatively sloped

Answer 9

complementary goods

Question 10

When any commodity or service is demanded for alternative uses, it’s called ……………………………….

Answer 10

Composite demand

Question 11

If any commodity is demanded for direct consumption, it is called ……………….

Answer 11

Direct Demand

Question 12

The demand for the substitute goods in the market is called …………………………

Answer 12

Competitive demand

Question 13

When the demand for a commodity s derived form the demand for other commodities, it is called ………………….

Answer 13

Derived Demand

Question 14

When desire for a commodity is not backed by purchasing power, it is …………………….. demand

Answer 14

Notional or ex ante (planned) demand

Question 15

When desire for a commodity is backed by the required purchasing power, it is …………………….. demand

Answer 15

Effective or ex post (actual) demand

Question 16

………….. and …………. determine the price of a commodity or a service in the market

Answer 16

demand ad supply

Question 17

effective demand = ………………….. + ………………………….

Answer 17

desire for a commodity + purchasing power

Question 18

For Inferior goods, when …………. increases ………………….. decreases and vice versa

Answer 18

income, demands

Question 19

For ………………… when income increases demand decreases and vice versa

Answer 19

Inferior

Question 20

For normal goods, when ……………… increases, …………………….. also increases and vice versa

Answer 20

income, demand

Question 21

For …………….. goods, when income increases,

demand increases and vice versa

Answer 21

Normal

Question 22

A demand curve is always …………………… , …………………. and …………………….. to the origin

Answer 22

negative, downward sloping and concave to the origin

Question 23

What’re the causes for the downward sloping of the demand curve

Answer 23

Income Effect
Substitution Effect
Law of Diminishing Marginal Utility

Question 24

If playing golf is habit among successful businessmen, then the demand for golf ball rises, a businessman may increase his demand for golf balls in order to show that he is a successful businessman. This is an example of ………………….. effect

Answer 24

bandwagon effect

Question 25

When a consumer decreases his purchase of a particular commodity to show that he no longer belongs to a particular social class, it is an example of …………………….. effect

Answer 25

snob effect

Question 26

O1) When a commodity holds a ……………. position in the consumer’s budget, variations in the price will leave the demand unaffected

Answer 26

insignificant

Question 27

When demand for a commodity depends on only the income of the consumer, it is …………. demand

Answer 27

income demand

Question 28

Electricity services being demanded for domestic and industrial use is an example of ………….. demand

Answer 28

Composite demand

Question 29

Demand for domestic air transport services provided either by Jet airways or by Kingfisher or Indian airlines is an example of ……………….

Answer 29

Competitive Demand

Question 30

Demand for bread and butter is example of ………….. demand

Answer 30

Direct demand

Question 31

When a machine producing cotton shirts is demanded as there is a demand for cotton shirts is an example of ……………….

Answer 31

derived demand

Question 32

Another name for notional or ex ante demand?

Answer 32

wants

Question 33

Another name for effective demand?

Answer 33

ex-post demand

Question 34

Effective demand = …………………. + ……………………
OR
Effective demand = …………………. + ……………………

Answer 34

Desire to buy + Purchasing power
OR
Notional or ex-ante demand + Purchasing Power

Question 35

An increase in the individual income of the consumer, with other things remaining unchanged would lead to …………………………………………..

Answer 35

increase in purchasing power (and vice versa)

Question 36

Given the money income of the consumer, an increase in the price of the commodity would lead to …………………………………………….

Answer 36

Decrease in the purchasing power (and vice versa)

Question 37

If a consumer expects the prices of a commodity to rise in the near future, he will purchase …………………… in the present

Answer 37

more of it

Question 38

If the income distribution moves in favour ……………….., the demand for commodities used by these people will be in demand

Answer 38

the poor people

Question 39

……………………. of a country also influences the demand

Answer 39

demographic structure or age distribution

Question 40

Market demand of a commodity means the sum total of all the demand of all the ……………of the market

Answer 40

individuals

Question 41

Individual demand curve is ………….. whereas market demand curve is ………………..

Answer 41

steeper, flatter

Question 42

What is the law of demand?

Answer 42

When P↑ D↓

When P↓ D↑

Question 43

Under …………… effect, when the price of an inferior commodity rises, people cut down their expenses to be able to afford that particular commodity

Answer 43

giffen effect

Question 44

Who observed the giffen effect?

Answer 44

Sir Robert Giffen