Why there is an inverse relationship between price and demand? – InterviewSolution

InterviewSolution

1.

Why there is an inverse relationship between price and demand?

Answer»

This inverse relationship between price and demand occurs because of two reasons. They are:

Income effect and
Substitution effect.

Discussion

No Comment Found

Related InterviewSolutions

A demand curve "shifts" due to change in:A. TastesB. IncomeC. Price of the related goodsD. All the above
The slope of demand curve is generally :A. NegativeB. PositiveC. ConstantD. Either (a) or (b)
What does the following diagram represents ? A. Change in DemandB. Change in Quantity DemandedC. Both (a) and (b)D. Neither (a) or (b)
What is elasticity of demand?
What is market demand?
Which of the following represents market demand curve ? A. `D_(1)D_(1)`B. `D_(3)D_(3)`C. `D_(2)D_(2)`D. None of the above
Define demand Explain the factors affecting demadn by an individual consumer.
Which of the following is a determinant of market demand ?A. Income of the consumersB. Season and weatherC. Price of related goodsD. All of the above
Expansion in demand leads to :A. Rightward shift in demand curveB. Downward Movement along the demand curveC. Upward Movement along the demand curveD. None of these
Define individual demand.