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FAQs on Theory of demand - Microeconomics - Economics Class 11 - Commerce

1. What is the theory of demand in microeconomics?
Ans. The theory of demand in microeconomics explains how consumers make choices in the marketplace based on their preferences and budget constraints. It explores the relationship between the price of a product and the quantity demanded by consumers, assuming other factors remain constant.
2. What are the determinants of demand in microeconomics?
Ans. The determinants of demand in microeconomics include factors such as the price of the product, consumer income, price of related goods, consumer preferences, population size, and expectations about the future. These factors can influence the quantity demanded of a product and its overall demand curve.
3. How does price elasticity of demand affect consumer behavior?
Ans. Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. If the demand for a product is highly elastic, meaning it is sensitive to price changes, consumers are more likely to adjust their purchasing behavior when prices fluctuate. On the other hand, if the demand is inelastic, consumers are less responsive to price changes.
4. What is the difference between individual demand and market demand?
Ans. Individual demand refers to the quantity of a product that a single consumer is willing and able to buy at various price levels. It focuses on the preferences and budget constraints of an individual. Market demand, on the other hand, combines the individual demands of all consumers in a particular market. It represents the total quantity of a product that all consumers are willing and able to buy at different price levels.
5. How does the theory of demand relate to the concept of equilibrium in microeconomics?
Ans. The theory of demand plays a crucial role in determining market equilibrium. The equilibrium price and quantity occur at the intersection of the demand and supply curves. At this point, the quantity demanded by consumers matches the quantity supplied by producers, resulting in a stable market condition. Understanding the theory of demand is essential to analyze and predict changes in market equilibrium due to shifts in demand or supply.
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