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Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers?
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Explain with the help of diagram the effect of following changes on th...
Effect of Changes on Demand of a Commodity
a) Fall in the Price of Substitution Goods
The demand for a commodity is affected by the price of its substitute goods. If the price of a substitute good falls, the demand for the given commodity decreases as consumers switch to the cheaper substitute.
Diagram:
- The original demand curve for the commodity is DD1.
- If the price of the substitute good falls, the demand curve for the commodity shifts leftward to D2D2.
Explanation:
- The fall in the price of the substitute good leads to an increase in the quantity demanded of the substitute good and a decrease in the quantity demanded of the given commodity.
- As a result, the demand curve for the commodity shifts leftward, indicating a decrease in demand.
b) Favourable Change in the Taste of Buyers
The demand for a commodity is affected by the preferences and tastes of buyers. If there is a favourable change in the tastes of buyers, the demand for the commodity increases.
Diagram:
- The original demand curve for the commodity is DD1.
- If there is a favourable change in the tastes of buyers, the demand curve for the commodity shifts rightward to D2D2.
Explanation:
- A favourable change in the tastes of buyers leads to an increase in the quantity demanded of the given commodity, even at the same price level.
- As a result, the demand curve for the commodity shifts rightward, indicating an increase in demand.
a) Fall in the Price of Substitution Goods
The demand for a commodity is affected by the price of its substitute goods. If the price of a substitute good falls, the demand for the given commodity decreases as consumers switch to the cheaper substitute.
Diagram:
- The original demand curve for the commodity is DD1.
- If the price of the substitute good falls, the demand curve for the commodity shifts leftward to D2D2.
Explanation:
- The fall in the price of the substitute good leads to an increase in the quantity demanded of the substitute good and a decrease in the quantity demanded of the given commodity.
- As a result, the demand curve for the commodity shifts leftward, indicating a decrease in demand.
b) Favourable Change in the Taste of Buyers
The demand for a commodity is affected by the preferences and tastes of buyers. If there is a favourable change in the tastes of buyers, the demand for the commodity increases.
Diagram:
- The original demand curve for the commodity is DD1.
- If there is a favourable change in the tastes of buyers, the demand curve for the commodity shifts rightward to D2D2.
Explanation:
- A favourable change in the tastes of buyers leads to an increase in the quantity demanded of the given commodity, even at the same price level.
- As a result, the demand curve for the commodity shifts rightward, indicating an increase in demand.
Community Answer
Explain with the help of diagram the effect of following changes on th...
A fall in price of substitution goods leads to decrease in demand for other good.
A favourable change in taste of buyers leads to forward shift in demand curve
A favourable change in taste of buyers leads to forward shift in demand curve
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Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers?
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Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers?.
Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Explain with the help of diagram the effect of following changes on the demand of commodity: a). A falls in the price of substitution goods b). A favourable change in the taste of buyers?.
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