FAQs on ECONOMICS - LAW OF DEMAND | ECO FOR SSC CGL; SSC CPO; SSC CHSL; SSC MTS

Question 1

1. What is the law of demand?

Accepted Answer

Ans. The law of demand states that, all other factors being constant, the quantity demanded of a good or service decreases as its price increases, and vice versa. In other words, there is an inverse relationship between price and quantity demanded.

Question 2

2. What factors can cause a shift in the demand curve?

Accepted Answer

Ans. Several factors can cause a shift in the demand curve, including changes in consumer income, prices of related goods, consumer preferences, population, and expectations about the future. An increase in consumer income, for example, can lead to an increase in demand for normal goods.

Question 3

3. How does the law of demand affect consumer behavior?

Accepted Answer

Ans. The law of demand helps explain how consumers respond to changes in price. When the price of a good or service increases, consumers tend to buy less of it, assuming all other factors remain constant. On the other hand, when the price decreases, consumers are more likely to purchase more of the good or service.

Question 4

4. Can the law of demand be violated?

Accepted Answer

Ans. While the law of demand generally holds true, there can be exceptions or situations where it appears to be violated. For example, some luxury goods may experience an increase in demand as their prices rise, due to the perception of higher quality or exclusivity. Additionally, certain goods may have addictive qualities, leading to an increase in demand even as prices increase.

Question 5

5. How does the law of demand impact pricing decisions by firms?

Accepted Answer

Ans. The law of demand is crucial for firms when determining pricing strategies. If a firm wants to increase sales, they may consider lowering the price of their product to stimulate demand. Conversely, if a firm wants to maximize profits, they may increase the price of their product, knowing that demand will likely decrease. Understanding the law of demand helps firms make informed decisions about pricing and market positioning.

ECONOMICS - LAW OF DEMAND - ECO FOR SSC CGL; SSC CPO; SSC CHSL; SSC MTS

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