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All questions of Microeconomics for UPSC CSE Exam

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What is the other name for opportunity cost in economics
  • a)
    Total Cost
  • b)
    Marginal cost
  • c)
    Economic cost
  • d)
    Economic problem
Correct answer is option 'C'. Can you explain this answer?

Aryan Khanna answered
Economic cost is the combination of losses of any goods that have a value attached to them by any one individual. Economic cost is used mainly by economists as means to compare the prudence of one course of action with that of another.

An economy always produces on, but not inside a PPC.
  • a)
    True
  • b)
    False
  • c)
    Occasionally
  • d)
    Can’t say
Correct answer is option 'B'. Can you explain this answer?

Alok Mehta answered
An economy does not always on a ppc . when an economy produces on ppc it mean there is no unemployment and all the resources are fully and being used efficiently but practically these 2 conditions may not apply . if there is unemployment or inefficent use of resources an ecnmy will opreate inside the ppc therefor the above given statement is refuted .

A budget constraint line is a result of?
  • a)
    Market price of commodity X
  • b)
    Market price of commodity Y
  • c)
    Income of the consumer
  • d)
    All of above
Correct answer is option 'A'. Can you explain this answer?

Nandini Chakraborty answered
Explanation:

A budget constraint line is a graphical representation of the various combinations of two goods that a consumer can afford, given his/her income and the prices of the goods. It is also called a budget line or a price line.

The budget constraint line is a result of the market price of commodity X, which is one of the two goods that the consumer is considering purchasing. The market price of commodity Y is also a factor in determining the slope of the budget constraint line, but it is not the result of the line.

The income of the consumer is also an important factor in determining the position of the budget constraint line on the graph. The higher the income, the further out the line will be from the origin, indicating that the consumer can afford to purchase more of both goods.

However, the income of the consumer is not the result of the budget constraint line. It is simply a factor that is taken into account when drawing the line.

In summary, the budget constraint line is a result of the market price of commodity X, and to a lesser extent, the market price of commodity Y. The income of the consumer is a factor that is taken into account when drawing the line, but it is not the result of the line itself.

HTML:

Explanation:

  • A budget constraint line is a graphical representation of the various combinations of two goods that a consumer can afford, given his/her income and the prices of the goods. It is also called a budget line or a price line.

  • The budget constraint line is a result of the market price of commodity X, which is one of the two goods that the consumer is considering purchasing. The market price of commodity Y is also a factor in determining the slope of the budget constraint line, but it is not the result of the line.

  • The income of the consumer is also an important factor in determining the position of the budget constraint line on the graph. The higher the income, the further out the line will be from the origin, indicating that the consumer can afford to purchase more of both goods.

  • However, the income of the consumer is not the result of the budget constraint line. It is simply a factor that is taken into account when drawing the line.

  • In summary, the budget constraint line is a result of the market price of commodity X, and to a lesser extent, the market price of commodity Y. The income of the consumer is a factor that is taken into account when drawing the line, but it is not the result of the line itself.

The want satisfying power of a commodity is known as:
  • a)
    Utility
  • b)
    Consumption
  • c)
    Supply
  • d)
    Demand
Correct answer is option 'A'. Can you explain this answer?

Aryan Khanna answered
The want satisfying power of a commodity is called utility. It is a quality possessed by a commodity or service to satisfy human wants. Utility can also be defined as value-in-use of a commodity because the satisfaction which we get from the consumption of a commodity is its value-in-use.

According to the law of diminishing marginal utility, _________?
  • a)
    Additional consumption always yields extra utility
  • b)
    Additional consumption leads to lower average total utility
  • c)
    Additional consumption always yields negative utility
  • d)
    After a point any addition in the consumption causes a reduction in total utility.
Correct answer is option 'D'. Can you explain this answer?

Priya Patel answered
According to the Law of Diminishing Marginal Utility, marginal utility of a good diminishes as an individual consumes more units of a good. In other words, as a consumer takes more units of a good, the extra utility or satisfaction that he derives from an extra unit of the good goes on falling.
It should be carefully noted that is the marginal utility and not the total utility than declines with the increase in the consumption of a good. The law of diminishing marginal utility means that the total utility increases but at a decreasing rate.

Can you explain the answer of this question below:

Indifference curve represents?

  • A:

    Four commodities

  • B:

    Less than two commodities

  • C:

    Only two commodities

  • D:

    More than two commodities

The answer is C.

Alok Mehta answered
An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.

____________ is an ideal market?
  • a)
    Monopolistic competition
  • b)
    Oligopoly
  • c)
    Perfect competition
  • d)
    Monopoly
Correct answer is option 'C'. Can you explain this answer?

Vikas Kapoor answered
Pure or perfect competition is a theoretical market structure in which the following criteria are met: All firms sell an identical product (the product is a "commodity" or "homogeneous"). All firms are price takers (they cannot influence the market price of their product). Market share has no influence on prices.

Which of the following curve has a negative slope and cannot interest each other?
  • a)
    Isoquants
  • b)
    Demand and supply curves
  • c)
    Indifference curves
  • d)
    None of above
Correct answer is option 'C'. Can you explain this answer?

Vikas Kapoor answered
An indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. Along the curve, the consumer has no preference for either combination of goods because both goods provide the same level of utility.
Each indifference curve is convex to the origin, and no two indifference curves ever intersect.

The coefficient of price elasticity of demand is always
  • a)
    Zero
  • b)
    Undefined
  • c)
    Positive
  • d)
    Negative
Correct answer is option 'D'. Can you explain this answer?

Devansh Goyal answered
Explanation:

The coefficient of price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

The coefficient of price elasticity of demand can take on different values depending on the degree of responsiveness of quantity demanded to price changes. However, it is always negative because of the inverse relationship between price and quantity demanded.

Here are some possible values of the coefficient of price elasticity of demand and what they indicate:

- Elastic demand (|PED| > 1): A small percentage change in price leads to a relatively larger percentage change in quantity demanded. Consumers are very responsive to price changes, and the total revenue of the seller decreases when the price is increased.
- Inelastic demand (|PED| < 1):="" a="" large="" percentage="" change="" in="" price="" leads="" to="" a="" relatively="" small="" percentage="" change="" in="" quantity="" demanded.="" consumers="" are="" not="" very="" responsive="" to="" price="" changes,="" and="" the="" total="" revenue="" of="" the="" seller="" increases="" when="" the="" price="" is="" />
- Unit elastic demand (|PED| = 1): A percentage change in price leads to an equal percentage change in quantity demanded. The total revenue of the seller remains constant when the price is changed.

Conclusion:

In conclusion, the coefficient of price elasticity of demand is always negative because of the inverse relationship between price and quantity demanded. The value of this coefficient can vary depending on the degree of responsiveness of quantity demanded to price changes.

Opportunity cost is the
  • a)
    Next best alternative sacrificed
  • b)
    Next best alternative chosen
  • c)
    Next best alternative available
  • d)
    Next best alternative produced
Correct answer is option 'A'. Can you explain this answer?

Knowledge Hub answered
“Opportunity cost” of a resource, means the value of the next-highest-valued alternative use of that resource.
E.g. you spend time and money going to a movie, you cannot spend that time at home playing video games, and you cannot spend the money on something else. If your next-best alternative to seeing the movie is playing video games at home, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not playing videos game at home.

In the long run TPP changes with the change in which of the following factors
  • a)
    Fixed factors
  • b)
    Variable factors
  • c)
    Economic cost
  • d)
    All the factors
Correct answer is option 'D'. Can you explain this answer?

Ishan Choudhury answered
In the long run TPP changes with the change in all the factors  is the right option because total product can be change in long run production function. After change every situation because in long run production more time should be taken by performer.

Cartels exist in
a) Monopoly
b) Duopoly
c) Oligopoly
d) Perfect Competition
Correct answer is option 'C'. Can you explain this answer?

Kavita Joshi answered
A cartel is a grouping of producers that work together to protect their interests. Cartels are created when a few large producers decide to co-operate with respect to aspects of their market. Once 

Utility is measured in terms of?
  • a)
    Centimeter
  • b)
    Seconds
  • c)
    Gram
  • d)
    Utils
Correct answer is option 'D'. Can you explain this answer?

Alok Mehta answered
It can be seen that utility is measured in numbers that are purely cardinal, rather than ordinal. The numbers used to measure utility (often in a unit called the "util") is useful only for comparison.

 _____________ is defined as the difference between what the consumer is willing to pay for a product and what he actually pays?
  • a)
    Consumer surplus
  • b)
    Price gap
  • c)
    Consumer burden
  • d)
    Optimum price
Correct answer is option 'A'. Can you explain this answer?

Devansh Goyal answered
The consumer surplus is the difference between the highest price a consumer is willing to pay and the actual market price of the good. The producer surplus is the difference between the market price and the lowest price a producer would be willing to accept. For producers, a surplus can be thought of as profit, because producers usually don't want to produce at a loss. The two together create an economic surplus.

Which of the following utility approach is based on the theory of Alfred Marshall?
  • a)
    Independent variable approach
  • b)
    Cardinal utility approach
  • c)
    Ordinal utility approach
  • d)
    None of these
Correct answer is option 'B'. Can you explain this answer?

Ishan Choudhury answered
The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1,2,3, and so on.  Here, one Util is equivalent to one rupee and the utility of money remains constant.

The concept of marginal utility was developed by?
  • a)
    Paul Samuelson
  • b)
    Alfred Marshall
  • c)
    Hicks & Allen
  • d)
    Robbins
Correct answer is option 'B'. Can you explain this answer?

Aryan Khanna answered
The concept of marginal utility grew out of attempts by economists to explain the determination of price. The term “marginal utility”, credited to the Austrian economist Friedrich von Wieser by Alfred Marshall, was a translation of Wieser's term “Grenznutzen” (border-use).

This a MCQ (Multiple Choice Question) based practice test of Chapter 4 - Theory of Firm Under Perfect Competition of Economics of Class XII (12) for the quick revision/preparation of School Board examinations
Q  Condition for producer equilibrium is:
  • a)
    TC=TSC
  • b)
    MC=MR
  • c)
    TR=TVC
  • d)
    None of above
Correct answer is 'B'. Can you explain this answer?

Puja Nambiar answered
Condition for Producer Equilibrium

The producer equilibrium is a situation where a firm is maximizing its profits by producing a level of output where marginal cost (MC) is equal to marginal revenue (MR). In other words, the producer equilibrium is reached when a firm is producing at the point where it is making the highest possible economic profit.

The condition for producer equilibrium is as follows:

MC = MR

Explanation

Marginal cost (MC) is the additional cost of producing one more unit of output. Marginal revenue (MR) is the additional revenue earned by selling one more unit of output. In perfect competition, a firm is a price taker, meaning it cannot influence the market price of the product it sells. Therefore, the price of the product remains constant for the firm.

In perfect competition, the firm's marginal revenue (MR) is equal to the price of the product. Therefore, the condition for producer equilibrium can be rephrased as:

MC = P

where P is the price of the product.

If a firm produces at a level where MC is less than MR, it means that the firm can increase its profits by producing more units of output. Similarly, if a firm produces at a level where MC is greater than MR, it means that the firm can increase its profits by producing fewer units of output. So, the producer equilibrium is reached only when MC is equal to MR, where the firm is producing the level of output that maximizes its profits.

Conclusion

The condition for producer equilibrium is MC = MR, where a firm is producing the level of output that maximizes its profits. In perfect competition, where a firm is a price taker, the condition can be rephrased as MC = P.

Under monopoly form of market, TR is maximum when
  • a)
    MR is maximum
  • b)
    MR<0
  • c)
    MR>0
  • d)
    MR is zero
Correct answer is option 'D'. Can you explain this answer?

Aryan Khanna answered
Marginal revenue means additional revenue generate/received from the sale of additional unit of output.In imperfect (monopoly) when TR increases MR decreases , when TR become maximum MR reaches to zero.

The firm and the industry are one and the same in:
  • a)
    Monopolistic competition
  • b)
    Monopoly
  • c)
    Duopoly
  • d)
    Oligopoly
Correct answer is option 'B'. Can you explain this answer?

Priya Patel answered
A type of market structure, where the firm has absolute power to produce and sell a product or service having no close substitutes. In simple terms, monopolised market is one where there is a single seller, selling a product with no near substitutes to a large number of buyers. As the firm and industry are one and the same thing in the monopoly market, so it is a single-firm industry. There is zero or negative cross elasticity of demand for a monopoly product. Monopoly can be found in public utility services such as telephone, electricity and so on.

At what point does total utility starts diminishing?
  • a)
    When marginal utility remains constant
  • b)
    When marginal utility is increasing
  • c)
     When marginal utility is negative
  • d)
    When marginal utility is negative
Correct answer is option 'D'. Can you explain this answer?

Kiran Mehta answered
The law of diminishing marginal utility is a law of economics stating that as a person in creases consumption of a products while keeping consumption of other product costant , there is a decline in the marginal utility that persob derives from consuming each additional unit of product.

Consumer’s surplus is also known as?
  • a)
    Buyer’s surplus
  • b)
    Elasticity of demand
  • c)
    Differential surplus
  • d)
     Indifference surplus
Correct answer is option 'A'. Can you explain this answer?

Arun Khanna answered
Consumer surplus is defined as the difference between the total amount that consumers are willing and able to pay for a good or service (indicated by the demand curve) and the total amount that they actually do pay (i.e. the market price) it is also known as buyer 's surplus.

The slope of price line throughout its length?
  • a)
    Remains the same
  • b)
    Is equal on the other side of the mid points
  • c)
    Differs from point to point
  • d)
    None of above
Correct answer is option 'A'. Can you explain this answer?

Ishan Choudhury answered
This is because in perfect competition , price line is a straight line. And the ratio (∆TR/∆Q )That is change in total revenue and change in output is constant.{MR=AR}So slope of a straight line is always constant.

Price discrimination can take place only in
  • a)
    Perfect competition
  • b)
    Oligopoly
  • c)
    Monopolistic competition
  • d)
    Monopoly
Correct answer is option 'D'. Can you explain this answer?

Pooja Kumari answered
Monopoly.... ... A discriminating monopoly is a single entity that charges different prices—typically, those that are not associated with the cost to provide the product or service—for its products or services for different consumers. Non-discriminating monopolies, on the other hand, do not engage in such a practice

Marginal Revenue is
  • a)
    Same as total revenue
  • b)
    Addition to the total revenue on the production of an additional unit of Output
  • c)
    Addition to the total revenue on the sale of an additional unit of Output
  • d)
    Additional cost involved in production
Correct answer is option 'C'. Can you explain this answer?

Simran Mishra answered
**Marginal Revenue: Addition to the total revenue on the sale of an additional unit of Output**

Marginal revenue is a concept used in economics to describe the additional revenue generated from the sale of one additional unit of output or product. It is the change in total revenue that occurs as a result of producing and selling one more unit of a product.

**Explanation:**

Marginal revenue is calculated by dividing the change in total revenue by the change in the quantity of output sold. It represents the increase in revenue that a firm earns when it sells one more unit of output.

To understand this concept, let's consider an example of a company that sells smartphones. Suppose the company sells its smartphones for $500 each, and it sells 1000 units in a month, resulting in a total revenue of $500,000. Now, if the company decides to produce and sell one more smartphone, it would have to adjust its price to attract buyers. Let's assume the company reduces the price to $400 for the additional unit.

In this case, the marginal revenue for the additional unit would be $400 because that is the amount of revenue generated from the sale of that unit. The total revenue after selling 1001 units would be $500,000 + $400 = $500,400. Therefore, the marginal revenue for the additional unit is $400.

It is important to note that marginal revenue can vary depending on the market conditions, demand for the product, and the pricing strategies employed by the firm. In some cases, marginal revenue may be positive, indicating an increase in revenue from selling an additional unit. However, in certain situations, such as when the market is highly competitive, marginal revenue may be negative, indicating a decrease in revenue from selling an additional unit.

Overall, marginal revenue is a crucial concept for businesses as it helps them determine the optimal level of production and pricing strategies to maximize their profits. By understanding the change in revenue associated with each additional unit of output, firms can make informed decisions regarding their production and pricing policies.

During excess demand
  • a)
    Market price is lower than the equilibrium price
  • b)
    Market price is higher than the equilibrium price
  • c)
    Market price is same as the equilibrium price
  • d)
    None of these
Correct answer is option 'A'. Can you explain this answer?

Arun Khanna answered
Excess Demand: 
Excess demand refers to the situation when aggregate demand (AD) is more than the aggregate supply (AS) corresponding to full employment level of output in the economy. It is the excess of anticipated expenditure over the value of full employment output.

Price determination of a commodity is a subject matter of microeconomics.
  • a)
    False
  • b)
    True
  • c)
    Can’t say
  • d)
    Conditional
Correct answer is option 'B'. Can you explain this answer?

Prem Yadav answered
Price of a commodity is decided by demand and supply for it in the economy and aggregate demand supply are macro variables

Which of the following utility approach suggests that utility is a measurable and quantifiable entity?
  • a)
    Ordinal approach
  • b)
    Cardinal approach
  • c)
    Both cardinal & ordinal
  • d)
    None of these
Correct answer is option 'B'. Can you explain this answer?

Jayant Mishra answered
Cardinal Utility
Definition: The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1,2,3, and so on.The neo-classical economist developed the theory of consumption based on the assumption that utility is measurable and can be expressed cardinally. And to do so, they have introduced a hypothetical unit called as “Utils” meaning the units of utility. Here, one Util is equivalent to one rupee and the utility of money remains constant.

Explicit costs are paid to
  • a)
    External owners of factors
  • b)
    The tax authorities
  • c)
    Internal owners of factors
  • d)
    The government
Correct answer is option 'A'. Can you explain this answer?

Poonam Reddy answered
Total cost is what the firm pays for producing and selling its products. Explicit costs are normal business expenses that are easy to track and appear in the general ledger. Explicit costs are the only costs necessary to calculate a profit, as they clearly affect a company's profits. Wages that a firm pays its employees or rent that a firm pays for its office are explicit costs. 

Explain the relationship TC, TFC & TVC.
  • a)
    TVC+TFC= TC
  • b)
    TVC X TFC= TC
  • c)
    TVC-TFC= TC
  • d)
    TVC/TFC=TC
Correct answer is option 'A'. Can you explain this answer?

Vikas Kapoor answered
Relationship between TFC, TVC, and TC. Total fixed cost (TFC) is represented by a straight line parallel to X-axis and it remains unchanged for all output levels in a time period. ... TC is the sum of TFC and TVC. When no variable output is added, TC is equal to TFC.

Excess demand occurs when
  • a)
    Market price fall below the equilibrium price
  • b)
    Market price rise higher than the equilibrium price
  • c)
    Market price remains the same
  • d)
    none
Correct answer is option 'A'. Can you explain this answer?

Arjun Singhania answered
Excess Demand. When at the current price level, the quantity demanded is more than quantity supplied, a situation of excess demand is said to arise in the market. Excess demand occurs at a price less than the equilibrium price.

Normative economics states
  • a)
    What ought to be
  • b)
    Central problems of an economy
  • c)
    What was
  • d)
    What is
Correct answer is option 'A'. Can you explain this answer?

Priya Patel answered
Normative economics. Normative economics (as opposed to positive economics) is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be.

Ring deficient demand
  • a)
    Market price remains the same
  • b)
    Market price rise
  • c)
    Market price falls below the equilibrium price
  • d)
    Market price fall
Correct answer is option 'D'. Can you explain this answer?

Rajat Patel answered
Deficient demand refers to the situation when aggregate demand (AD) is less than the aggregate supply (AS) corresponding to full employment level of output in the economy. ... The situation of deficient demand arises when planned aggregate expenditure falls short of aggregate supply at the full employment level.

A rise in the price of the complementary good leads to
  • a)
    Shift of the demand curve of the given good only
  • b)
    Expansion of the supply curve of the given good only
  • c)
    Contraction of the demand for the given good
  • d)
    Shift of the demand and supply curves of the given good
Correct answer is option 'C'. Can you explain this answer?

Nandini Iyer answered
Complementary good or complement is a good with a negative cross elasticity of demand, in contrast to a substitute good. This means a good's demand is increased when the price of another good is decreased. ... When two goods are complements, they experience joint demand.

A complementary good is a good whose use is related to the use of an associated or paired good. Two goods (A and B) are complementary if using more of good A requires the use of more of good B. For example, the demand for one good (printers) generates demand for the other (ink cartridges).

Which of the following is not true?
  • a)
    Indifference curves cannot intersect each other
  • b)
    Two indifference curve can be tangent to each other
  • c)
    Indifference curves are convex to the origin
  • d)
    Indifference curves slopes downward to the right
Correct answer is option 'B'. Can you explain this answer?

Aryan Khanna answered
Each indifference curve is convex to the origin, and no two indifference curves ever intersect. Consumers are always assumed to be more satisfied when achieving bundles of goods on higher indifference curves. If a consumer's income increases, the curve will move higher up on a graph because the consumer can now afford more of each type of good.

What are the conditions for the long run equilibrium of the competitive firm?
  • a)
    SMC=SAC=LMC
  • b)
    P=MR
  • c)
    LMC=LAC=P
  • d)
    All of the above
Correct answer is option 'C'. Can you explain this answer?

Anjana Desai answered
Conditions for Long Run Equilibrium of Competitive Firm

In a perfectly competitive market, there are certain conditions that must be met for a firm to achieve long-run equilibrium. These conditions are as follows:

LMC = LAC = P

In the long run, a firm in a perfectly competitive market will produce at the point where its long-run marginal cost (LMC) is equal to its long-run average cost (LAC). At this point, the firm is producing at the minimum efficient scale, which means that it is producing at the lowest possible cost.

At the same time, the price of the good or service that the firm is selling (P) must be equal to its long-run marginal cost (LMC) and its long-run average cost (LAC). This condition ensures that the firm is earning zero economic profit in the long run.

Implications of these Conditions

When a firm is in long-run equilibrium, it is operating at maximum efficiency. It is producing at the lowest possible cost and selling its output at a price that is just enough to cover its costs. As a result, there is no incentive for new firms to enter the market, and existing firms have no reason to leave.

In this state of equilibrium, the market is perfectly competitive, with many firms producing the same good or service. Consumers benefit from the low prices that result from the firms' efficient production, and the firms themselves are able to earn a reasonable rate of return on their investments.

Conclusion

In conclusion, the conditions for long-run equilibrium of a competitive firm are that its long-run marginal cost (LMC) must be equal to its long-run average cost (LAC), and both these costs must be equal to the price (P) of the good or service. When these conditions are met, the firm is operating at maximum efficiency and the market is perfectly competitive.

The general shape of TPP in the short run is
  • a)
    V- shaped
  • b)
    Hyperbola
  • c)
    U shaped
  • d)
    Inverse U shaped
Correct answer is option 'D'. Can you explain this answer?

Naina Sharma answered
Both the Short-run average total cost curve (SRAC) and Long-run average cost curve (LRAC) curves are typically expressed as U-shaped.

This a MCQ (Multiple Choice Question) based practice test of Chapter 6 - Non-Competitive Markets of Economics of Class XII (12) for the quick revision/preparation of School Board examinations
Q  Which of the following is not the feature of an imperfect competition?
  • a)
    Large number of buyers
  • b)
    Single seller
  • c)
    Homogeneous products
  • d)
    Price maker
Correct answer is option 'C'. Can you explain this answer?

Arun Khanna answered
A homogeneous product is one that cannot be distinguished from competing products from different suppliers. In other words, the product has essentially the same physical characteristics and quality as similar products from other suppliers. One product can easily be substituted for the other.

Can you explain the answer of this question below:

Unfavorable change in the taste for a good leads to

  • A:

    Shift of the demand curve of the given good only

  • B:

    Movement of the demand and supply curves of the given good

  • C:

    Shift of the demand and supply curves of the given good

  • D:

    Contraction of the demand for the given good

The answer is D.

Kusum Chugh answered
Ans :TASTE AND PREFERENCES --~The demand for a commodity is also affected by the taste and preference of the consumer. ~The demand for a commodity will increase if consumer’s taste changes in favour of the commodity and,~Any UNFAVORABLE CHANGE in taste or PREFERENCE will REDUCE the DEMAND for the COMMODITY.

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