Test: Elementary Theory of Demand - Class 10 MCQ

For normal goods, an increase in consumer income typically results in an increase in demand, causing the demand curve to shift to the right. Consumers are willing and able to purchase more at every price level.

The market demand curve slopes downwards, indicating the inverse relationship between price and quantity demanded. As prices decrease, the total quantity demanded by all consumers in the market increases.

Individual demand is influenced directly by the price of the commodity, the consumer's income, and their tastes and preferences. Global economic trends may indirectly affect these factors but are not a direct influence on individual demand.

An increase in advertising can effectively boost consumer interest and preference for a product, leading to higher demand at all price levels, thus shifting the demand curve to the right.

A change in quantity demanded refers to movement along the demand curve resulting from a change in the price of the good. It indicates how much more or less of the good consumers are willing to purchase at different price levels.

The individual demand curve illustrates the various quantities of a commodity that a specific consumer is willing to purchase at different price points. This curve helps to visualize individual consumer behavior in response to price changes.

According to the law of demand, an increase in the price of a commodity typically results in a decrease in the quantity demanded. This is because higher prices make the good less affordable for consumers, reducing their willingness to purchase it.

Joint demand occurs when the demand for one good increases the demand for another good that is used in conjunction. In this case, printers and ink cartridges are complementary goods, so an increase in demand for printers will increase the demand for ink cartridges.

Derived demand refers to the demand for factors of production or services that arises from the demand for the final goods they help produce. In this case, an increase in production leads to a higher demand for labor.

The downward slope of the demand curve is primarily attributed to the Law of Diminishing Marginal Utility, which states that as consumers buy more units of a good, the additional satisfaction (utility) gained from each additional unit decreases, leading them to only purchase more if the price falls.

Individual demand refers to the quantity of a product that a single household is willing to buy at a specific price, whereas market demand aggregates the individual demands of all consumers in the market for that product. This distinction is crucial in understanding how overall demand is shaped by individual preferences.

Competitive demand refers to the demand for goods that are substitutes for each other. Coffee and tea are alternatives that consumers may choose between depending on their preferences and prices, demonstrating competitive demand.

The substitution effect occurs when consumers replace a more expensive good with a cheaper alternative. In this case, if the price of butter increases, consumers may switch to margarine, demonstrating the substitution effect.

For demand to exist, a consumer must have a desire to buy a good, the purchasing power to afford it, and the willingness to spend money. This combination ensures that a consumer is not just interested in a product but also capable and ready to purchase it.

A shift in consumer preferences away from a product typically leads to a decrease in demand, causing the demand curve to shift to the left. Consumers are less willing to buy the product at any given price.

The Law of Demand states that, all else being equal, when the price of a good decreases, the quantity demanded increases, and when the price increases, the quantity demanded decreases. This reflects the inverse relationship between price and demand.

The income effect describes how a change in the price of a good affects the purchasing power of the consumer, leading to a change in the quantity demanded. When prices drop, consumers feel richer and tend to buy more.

When the price of a complementary good decreases, consumers are likely to purchase more of both goods together, leading to an increase in demand for the primary good. This results in a rightward shift of the demand curve.

A demand schedule is a table that shows the quantities of a commodity that consumers are willing to purchase at different price levels. It helps visualize how demand varies with price, providing insights into consumer behavior.

The Giffen effect is a phenomenon where an increase in the price of an inferior good leads to an increase in quantity demanded, contradicting the Law of Demand. This occurs because consumers may substitute away from more expensive options and buy more of the inferior good.