List – I List – II a. Non-price quantity relationships of demand. i. Extension and contraction of demand. b. Income effect of a price rise greater than its substitution effect. ii. Ordinal utility approach. c. Transitivity and consistency of choices. iii. Increase and decrease in demand. d. Price-quantity relationships of demand. iv. Giffen goods
Matching Demand Concepts: List-I and List-II
This question requires matching economic concepts related to demand from List-I with their correct descriptions in List-II.
Analysis of Matchings
- a. Non-price quantity relationships of demand: Factors other than price (like income, tastes, related goods' prices) cause the entire demand curve to shift. This results in an increase or decrease in demand at a given price. Therefore, 'a' matches with iii. Increase and decrease in demand.
- b. Income effect of a price rise greater than its substitution effect: This specific condition, where the negative income effect of a price increase outweighs the substitution effect, leads to an increase in quantity demanded as price rises. This phenomenon is characteristic of Giffen goods. Therefore, 'b' matches with iv. Giffen goods.
- c. Transitivity and consistency of choices: The principles of transitivity (if choice A is preferred to B, and B to C, then A must be preferred to C) and consistency are foundational assumptions within the Ordinal utility approach to consumer theory, which uses indifference curves. Therefore, 'c' matches with ii. Ordinal utility approach.
- d. Price-quantity relationships of demand: When only the price of the good changes, causing movement along the existing demand curve, it reflects changes in the quantity demanded due to price. This is described as an extension (fall in price leads to higher quantity) or contraction (rise in price leads to lower quantity) of demand. Therefore, 'd' matches with i. Extension and contraction of demand.
Correct Matching Code
Based on the analysis above, the correct matching is:
- a - iii
- b - iv
- c - ii
- d - i
This corresponds to the code a - iii, b - iv, c - ii, d - i.
Important Questions from Demand analysis
The supply curve of cars is expected to shift rightwards with:
i. An increase in the price of cars
ii. A decrease in fuel prices
The supply curve of a normal good is ____________ sloping. It depicts ___________ on the x-axis and ___________ on the y-axis.
The demand curve gives the quantity demanded by the consumer at each ____________.
Which of the following statements is INCORRECT in the context of demand function?
Marginal Product is defined as:
