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101.	There are only 3 consumers (X, Y and Z) in a market and there demand functions are given as : `Q_(X) = 30 - 2P , Q_(Y) = 40 - 3P , Q_(Z) = 50 - 4P` From the given individual demand functions, determine the market demand function. Also, calculate the market demand at a price Rs. 10 per unit.
Answer» Market demand function can be determined through summation of individual depand function, i.e., `Q_(MD)=Q_(X)+Q_(Y)+Q_(Z)=(30-2P)+(40-3P)+(50-4P)=120-9P` Market Demand at a price of Rs. 10 per unit : `Q_(MD)=120-9P=120-9xx10=30` units.

102.	Suppose there are 20 consumers for a good and they have identical demand functions : `d(p) = 10 -3p` for any price less than or equal to `(10)/(3) and d_(1)(p) 0` at any price greater than `(10)/(3)`. What is the market demand funciton ?
Answer» From the given demand function, It can be seen that all the consumers demand only when price is either less than or equal to `(10)/(3)`. Hence, the market demand will be : `d_("market")(p)=20{d(p)}` `d_("market")(p) = 20{10-3p}` `d_("market")(p)=200-60 p` for any price less than or equal to `(10)/(3)` and d market (p)=0 at any price greater than `(10)/(3)`.

103.	What is the demand function?
Answer» Demand function shows the relationship between quantity demanded a particular commodity and the factors influencing it.

104.

What are the Determinants of Demand?

Answer»

The Determinants of Demands are:

Price of the given commodity
Price of related goods
The income of the customer
Tastes and preferences
The expectation of change in the price in future

105.	How does special preference of people affect the demand?
Answer» At times, people get very accustomed and used to certain goods. They cannot do with any other good. Even if there is some rise in the price of their preferred goods, their demand may not decrease.

106.	Distinguish between a normal good and an inferior good.
Answer» An inferior good is a type of good that declines in demand when income rises. These could be items such as generic foods, off-brand electronics, and discount store clothing. In contrast to inferior goods are normal goods. A normal good acts just the opposite of an inferior good; demand increases when income increases

107.	In the law of demand,(A) Price Is effect variable and demand is cause variable(B) Price is cause variable and demand is effect variable(C) Income is cause variable and demand is effect variable(D) Price and demand are cause variable and income is- effect variable
Answer» Correct option is (B) Price is cause variable and demand is effect variable

108.	Define the law of demand.
Answer» The law of demand states the inverse relationship between price and quantity demanded, keeping other factors constant (ceteris paribus). In microeconomics, the law of demand is a fundamental principle which states that, "conditional on all else being equal, as the price of a good increases, quantity demanded will decrease; conversely, as the price of a good decreases, quantity demanded will increase".

109.	Explain the meanings of normal goods and inferior goods.
Answer» Normal goods are the goods which have income effect positive i.e an increase in income of the consumer leads to an increase in demand for the commodity and vice-versa. On the other hand, inferior goods are the ones which have income effect negative i.e an increase in income of the consumer leads to a decrease in demand of the commodity and vice-versa.

110.	What are Complementary goods?
Answer» Complementary goods are those goods which are used together to satisfy a particular want.

111.	Define Normal goods.
Answer» Most of the commodities that we usually buy are normal goods. As a normal practice, a customer purchases more of such goods, when his income rises and less of it when his income falls. The commodities that follow this rule are known as ‘Normal Goods.’

112.	What are Inferior Goods?
Answer» Inferior goods refer to those goods whose demand decreases with an increase in income. And, this is known as Inferior goods.

113.	Define elasticity of demand greater than unity.
Answer» when change in demand is proportionately greater than the change in income of the consumer then this type of income elasticity of demand is known to be greater than unity, in such a case, elasticity of demand ε_y > 1.

114.	Define elasticity of demand lesser than unity.
Answer» When change in demand is proportionately lesser than change in income of the consumer then this type of income elasticity of demand is known to be lesser than unity. In such a case, elasticity of demand ε_y < 1.

115.	Name the types into which we can divide the determinants of demand
Answer» Price of commodity/service Factors other than price (i.e. other determinants)

116.	What is Demand?
Answer» Goods are demanded because they have the capacity to satisfy our wants. However, every want of a consumer cannot be called a demand. Demand does not mean a desire for a commodity.

117.	Spot the inferior good:A. WheatB. BajraC. RiceD. None of the above.
Answer» Correct Answer - D

118.	an "inferior" good is one which is:A. A low quality goodB. A low priced goodC. Below the income statusD. All the above
Answer» Correct Answer - C

119.	A statement about demand of a good includes information about:A. PriceB. QuantityC. Period of timeD. All the above
Answer» Correct Answer - D

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