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Questions and Answers
What is the Law of Demand?
What is the Law of Demand?
- When the price of a product rises, its quantity demanded decreases, and vice versa
- When the price of a product rises, its quantity demanded increases, and vice versa
- When the price of a product falls, its quantity demanded decreases, and vice versa
- When the price of a product falls, its quantity demanded increases, and vice versa (correct)
What happens to the quantity demanded when the price of a commodity decreases?
What happens to the quantity demanded when the price of a commodity decreases?
- It remains constant
- It fluctuates
- It decreases
- It increases (correct)
In the given example, what does the individual do when the price of the pack of soft drinks is reduced to ₹105?
In the given example, what does the individual do when the price of the pack of soft drinks is reduced to ₹105?
- Purchases three packs
- Purchases two packs (correct)
- Purchases one pack
- Does not purchase the pack at all
What is the common observation about consumer behavior and the price of a commodity?
What is the common observation about consumer behavior and the price of a commodity?
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What is the relationship between the demand and price of a commodity according to the law of demand?
What is the relationship between the demand and price of a commodity according to the law of demand?
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Study Notes
Law of Demand
- The Law of Demand states that there is an inverse relationship between the price of a commodity and the quantity demanded.
- When the price of a commodity decreases, the quantity demanded increases, and vice versa.
Effect of Price Change on Quantity Demanded
- If the price of a commodity decreases, the quantity demanded increases.
- For example, when the price of a pack of soft drinks is reduced to ₹105, the individual is likely to purchase more.
Consumer Behavior and Price
- A common observation about consumer behavior is that when the price of a commodity decreases, people tend to buy more, and when the price increases, they tend to buy less.
- This inverse relationship between the demand and price of a commodity is the foundation of the Law of Demand.
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