(a) (i) Demand: Demand is the quantity of a commodity that a consumer is willing and able to buy, at each possible price during a given period of time. 

(ii) 1. Price of Commodity : Other things being equal, with a rise in own price of the commodity, its demand contracts, and with a fall in price, its demand extends. This inverse relationship between own price if the commodity and its demands is called Law of Demand. 

2. Price of related goods : Demand for a commodity is also influenced by change in price of related goods. 

The related goods are of two kinds : 

• Substitute goods 

• Complementary goods 

3. Income : Demand for a commodity is also affected by income. Change in income may have a positive or negative effect on demand of the product depending upon type of good. 

(iii) Articles of distinction such as diamonds, gems, costly carpets, etc. are in more demand when their prices are high. The reason is that rich people measure the desirability of these articles in terms of their prices alone and consider these goods as honour possession. Therefore, rich people demand more of articles of distinction when their prices are high. 

(b) (i) Development of Interior Areas : To solve the problem of inequality of income and regional disparities in India, the Government has to take several programmes to develop the backward areas through the policy of industrialisation. This requires a huge expenditure. 

(ii) Defence Expenses : To protect India from external invasion from the hand of foreign countries, the Government has to allot a huge amount of money in every fiveyear plan for national defence. On the other hand, the Government has to spend a lot to maintain law and order situation within the country. 

(iii) Infrastructural Base : In order to maintain the pace of economic development, each government has to spend money on infrastructural facilities, e.g., irrigation, transport and communications, electricity and power generation etc. 

(iv) Welfare Activities : According to Prof. Sen, the development of a country (specially LDC) depends on the amount of expenditure the particular Government is willing to spend on the welfare activities within a country. For instance, improvement of drinking water facilities, sanitation facilities, medical and public health etc. On the other hand, the Government has to spend huge amount for alleviating income inequalities, poverty in a less developed country like India. 

(v) Prevention of Monopoly : In India, most of the big private industries show a tendency towards concentration of economic power, i.e., monopolisation. Hence, the Government has to spend huge amount of money to set up public industries which will curb the monopoly power of these private industries. This requires a huge expenditure.