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In Economics ...

Question

In Economics when demand for a commodity increases with a fall in its price it is known as.

A

Contraction of demand

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B

Expansion of demand

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C

No change in demand

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D

None of the above

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Solution

The correct option is D Expansion of demand
When the demand increases as a result of price fall, this is known as Expansion of Demand . In other words, it states that rise in quantity demanded due to reduction in price of commodity, other factors remaining constant.

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Q. Fill in the blanks with appropriate alternatives given in the brackets:

1. When price of commodity rises, the demand for it ______________. (rises/ contracts/ remains constant/ becomes negative)

2. When less is purchased at the constant price, it is called _______ in demand. (increase/ decrease/ expansion/ contraction)

3. When the price of petrol goes up, demand of cars will ___________. (rise/ fall/ not change/ remain unchanged)

4. Market demand is an aggregate of purchasing by _________ buyers. (some/ all/ one/ two)

5. Indirect demand is also known as _____________ demand. (derived/ direct/ composite/ joint)

Which of the following are true?

a) Extension and Co when price of one commodity falls, new consumers will buy commodity contraction of demand are related to change in price
b) Extension and Contraction of demand results in the movement along side the demand curve

Q. If demand of the commodity changes with the change in price, it is known as ________.

Q. The demand for a commodity does not change with increase in its price from Rs. 5 to Rs. 10. What is its elasticity of demand ?

Q. “The Law of Demand states other things being equal, the quantity demanded of a commodity increases when its price falls and decreases when its price rises. There are several assumptions of the Law of Demand.”
Which of these must change in order to apply the ‘Law of Demand?

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