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Questions and Answers
What is the difference between a normal good and an inferior good?
What is the difference between a normal good and an inferior good?
A normal good is a good for which demand increases as income increases, while an inferior good is a good for which demand decreases as income increases.
Give an example of a substitute good.
Give an example of a substitute good.
Margarine is a substitute for butter.
What happens to the demand for a substitute good when its price increases?
What happens to the demand for a substitute good when its price increases?
Consumers are likely to switch to the other good, leading to an increase in demand for that good.
Provide an example of complementary goods.
Provide an example of complementary goods.
What effect does an increase in the price of a complementary good have on the demand for the other good?
What effect does an increase in the price of a complementary good have on the demand for the other good?
Name three demographic factors that can affect consumer demand.
Name three demographic factors that can affect consumer demand.
What is consumer equilibrium?
What is consumer equilibrium?
What is the condition for consumer equilibrium in case of a single commodity?
What is the condition for consumer equilibrium in case of a single commodity?
What happens if less than equilibrium quantity is consumed?
What happens if less than equilibrium quantity is consumed?
What happens if more than equilibrium quantity is consumed?
What happens if more than equilibrium quantity is consumed?
What is the fundamental law of satisfaction?
What is the fundamental law of satisfaction?
How is consumer equilibrium achieved according to the Law of Equi-Marginal Utility?
How is consumer equilibrium achieved according to the Law of Equi-Marginal Utility?
What is the concept also known as Gossen’s Second Law of Maximum Satisfaction?
What is the concept also known as Gossen’s Second Law of Maximum Satisfaction?
What is the adjustment mechanism if the ratio of marginal utilities is not equal to the ratio of prices?
What is the adjustment mechanism if the ratio of marginal utilities is not equal to the ratio of prices?
According to Marshal Approach, what will the consumer continue to adjust their consumption until?
According to Marshal Approach, what will the consumer continue to adjust their consumption until?
What is the basis of the adjustment mechanism in consumer equilibrium according to Marshal Approach?
What is the basis of the adjustment mechanism in consumer equilibrium according to Marshal Approach?
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