10th Economics Ch. Elementary of Demand AP

Prof Santosh Yadav’s Time :- 30 min
Std. X ACE PRIVATE TUITIONS

ICSE Economics Marks:- 20
Ch. Elementary of Demand
Q.1 Multiple choice questions:

1. Following is not the assumption of law of demand: [4]
a) Commodity's own price should remain constant
b) Income of the consumers should remain constant
c) Price of related good should not change
d) There should be no change in consumer's tastes an preference.
2. What kind of a commodity will have inverse relation between income and demand?
(a) Normal good
(b)Interior good
(c) Essential good
(d) Luxury good
3. What does a downward movement along the same demand curve indicate?
a) Increase in demand
b) Decrease in demand
c) Contraction in demand
d) Expansion in demand
4. when the demand curve of a product shifts to the right, it represents a situation of
(a) Increase in demand
(b) Expansion in demand
(c) Decrease in demand
(d) Contraction in demand
Q.2 Answer the following questions: (each 2 marks)

1. How marketing helps to improvement of standard of living people.?
A. Marketing aims at improving the living standards of people by:
(a) providing a wide variety of products and services
(b) supplying new and better quality products
(c) creating more employment opportunities.
2. What causes a downward movement along a demand curve?
A. Expansion of demand results in downward movement along the same demand curve.
3. Briefly explain one exception to the law of demand
A. If the consumers expect a shortage or scarcity of a particular commodity in the near future,
then they would start buying more and more of that commodity in the current period even if
its price is rising
Question 3
1. Causes behind shift in Demand curve(5)
A The market demand curve for a commodity may shift rightward or leftward. The following
factors may cause such shifts in the demand curve:
(1) Change in Income: As long as a good is normal, the demand curve for it shifts upward
to the right, when aggregate income increases in an economy. Decrease in income leads to
downward shift of the demand curve. During the late 1980s and early 1990s, the Japanese
economy was growing strongly. As a result, there was an increase in demand for Levi's
Prof. Santosh Yadav -1- Ace Private Tuitions
jeans and Nike shoes. In recent years, demand for cell phones, cars, ACs, etc., has increased
to some extent in India due to this factor. Thus, at any given price, as income increases,
quantity demanded increases and the demand curve shifts to the right. Opposite happens
when income falls. As income falls, demand decreases and shifts the demand curve to the
left.
(ii) Change in Price of Related Goods: As studied earlier, related goods are of two types
(a) substitute goods and
(b) complementary goods. Any change in price of one good may shift the demand curve for
the other. Take the example of tea and coffee which are substitute goods. The demand
curve for tea will shift to the right, if price of coffee rises. This is because rise in coffee
price has made the tea relatively cheaper. Therefore, consumers will substitute tea for
coffee. As a result, demand for tea will increase and shifts the demand curve rightward. On
the contrary, the demand curve for tea would shift to the left when price of coffee falls.
Now take another example of milk and sugar which are complementary goods. If the price
of milk falls, the demand curve for sugar will shift to the right indicating the increase in
demand. On the other hand, if price of milk rises (due to decrease in its demand) demand
curve for sugar will shift downward to the left which means decrease in demand.
(iii) Change in Tastes: A change in taste may also cause shifts in the demand curve. A rise
in liking for a product will cause rightward shift in the demand curve (i.e. increase in
demand). For example, if people come to know that the use of Neem soap prevents pimples
on the face, this will definitely generate an increase in demand for it. Likewise, a decline in
liking for the product will reduce the demand for it, i.e. shifts the demand curve to the left.
(iv) Change in Population: An increase in population would shift the market demand curve
to the right, whereas a decrease in population will shift the market demand curve downward
to the left. Market demand curve in India, to a great extent have shifted to the right on
account of this factor for a large number of commodities.
2. Write any Four factors affecting demand for commodity .
A. Demand for a good is the quantity of that good which a buyer is willing to buy at a
particular price, during a given period of time
Four Factors Affecting the Demand for a Commodity
i) Price is the most important factor that influences a consumer's decision to purchase a
particular commodity.
ii) Lower price of a commodity attracts more consumers and higher price restricts their
number.
(iii) Income of the consumer is a key factor affecting the demand for a commodity. As
income rises, people are likely to buy more of a normal commodity and vice-versa.
(Demand for a commodity is also affected by change in prices of related goods. For
example, demand for carm not only depend upon its own price (i.e. price of car) but also
depends on the price of petrol or diesel.
(IV) Tastes and Preferences Other things being equal, demand for those goods increases for
which consumes develop strong tastes and preferences. Contrary to it, if tastes or preference
for a product is fading (decreasing its demand will decrease.
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Prof Santosh Yadav’s Time :- 30 min

Std. X ACE PRIVATE TUITIONS

Q.1 Multiple choice questions:

Q.2 Answer the following questions: (each 2 marks)

Prof. Santosh Yadav -2- Ace Private Tuitions

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