Match List-I with List-II. Choose the correct answer from the options given below:List-I List-II A. Movement in Demand curve I. Income effect stronger than substitute effect B. Shift in Demand Curve II. Percentage change in Demand over price C. Elasticity of Demand III. Change in Price D. Giffen good IV. Change in other than price
A-III, B-IV, C-II, D-I
Understanding Demand Curve Changes and Concepts
The question asks us to match key economic concepts related to demand from List-I with their correct descriptions or causes from List-II. Let's analyze each item in List-I and find its corresponding match in List-II.
Analyzing Each Demand Concept Match
Let's break down each item from List-I and determine its appropriate match from List-II:
- A. Movement in Demand curve: A movement *along* the demand curve occurs when the price of the good itself changes. This leads to a change in the quantity demanded, but the underlying relationship between price and quantity demanded (the curve itself) remains the same. This is directly caused by a change in the price of the commodity.
- B. Shift in Demand Curve: A shift of the *entire* demand curve occurs when factors *other than* the price of the good change. These factors include things like consumer income, tastes and preferences, prices of related goods (substitutes and complements), consumer expectations, and the number of buyers. A change in any of these "other factors" causes a new demand curve to be drawn.
- C. Elasticity of Demand: Elasticity of demand is a measure of the responsiveness of the quantity demanded to a change in its price. It tells us how much the quantity demanded changes in percentage terms when the price changes by a certain percentage. The most common measure is Price Elasticity of Demand, calculated as the percentage change in quantity demanded divided by the percentage change in price.
- D. Giffen good: A Giffen good is a rare type of inferior good for which demand increases as the price increases, violating the law of demand. This occurs because the negative income effect (as price rises, real income falls, leading to more consumption of the inferior good) is stronger than the substitution effect (as price rises, consumers substitute away from the good).
Matching List-I with List-II
Based on the analysis above, we can establish the correct matches:- A. Movement in Demand curve matches III. Change in Price.
- B. Shift in Demand Curve matches IV. Change in other than price.
- C. Elasticity of Demand matches II. Percentage change in Demand over price.
- D. Giffen good matches I. Income effect stronger than substitute effect.
So the correct matching is A-III, B-IV, C-II, D-I.
| List-I (Concept) | List-II (Description/Cause) | Match |
|---|---|---|
| A. Movement in Demand curve | III. Change in Price | A-III |
| B. Shift in Demand Curve | IV. Change in other than price | B-IV |
| C. Elasticity of Demand | II. Percentage change in Demand over price | C-II |
| D. Giffen good | I. Income effect stronger than substitute effect | D-I |
This matching corresponds to the option A-III, B-IV, C-II, D-I.
Revision Table: Key Demand Concepts
| Concept | What it is | Caused by |
|---|---|---|
| Movement along Demand Curve | Change in quantity demanded along the same curve | Change in the good's own price |
| Shift of Demand Curve | Change in demand, entire curve moves | Change in factors other than the good's own price (income, tastes, prices of related goods, etc.) |
| Elasticity of Demand | Measures responsiveness of quantity demanded to price changes | Calculated from changes in price and quantity demanded |
| Giffen Good | Inferior good where demand rises as price rises | Income effect is negative and stronger than substitution effect |
Additional Information: Understanding Demand Curve Changes
It is crucial to distinguish between a movement along the demand curve and a shift in the demand curve. A movement happens only when the price of the good changes, showing how the quantity demanded changes at different price points *on the existing curve*. A shift happens when something else affects demand, changing the entire relationship between price and quantity demanded at all price points, effectively creating a *new* demand curve.
Elasticity provides a quantitative measure of how sensitive demand is to price changes. For example, if demand is highly elastic, a small price increase leads to a large drop in quantity demanded. If it's inelastic, a price increase has little effect on quantity demanded.
Giffen goods are theoretical exceptions to the law of demand and are rarely observed in the real world. They are distinct from Veblen goods, where demand increases with price due to the prestige associated with the high price.
Important Questions from Economics and Central Problems of Economy
If the value of Investment Multiplier is 5 and the increased income is ₹ 800 crore in an economy, then find the value of change in the investment in the economy.
Which of the following statements are true?
(A) Quantitative tools control the extent of money supply by changing the CRR.
(B) There are two types of open market operations – outright and upright.
(C) A fall in the bank rate can decrease the money supply.
(D) Selling of a bond by RBI leads to reduction in quantity of reserves.
(E) The RBI can influence money supply by changing the rate at which it gives loan to the commercial banks.
Choose the correct answer from the options given below:
Paradox of Thrift means :
Match List-I with List-II:
List-I List-II (A) Bank Rate (I) Securities are pledged in order to repurchase (B) Marginal Standing Facility (II) Minimum rate at which funds are provided for long term (C) Repo Rate (III) Also known as Penal Interest Rate (D) Reverse Repo Rate (IV) Central Bank borrows funds from commercial banks Choose the correct answer from the options given below:
Which of the following is not a function of Central Bank ?
