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Theory of Demand and Supply - 2 Video Lecture - Crash Course for CA Foundation
FAQs on Theory of Demand and Supply - 2
| 1. What is the law of demand in economics? |  |
Ans. The law of demand states that, all else being equal, as the price of a good or service decreases, the quantity demanded by consumers increases, and vice versa. This inverse relationship between price and quantity demanded is fundamental to the theory of demand.
| 2. How do shifts in supply affect market equilibrium? | |
Ans. Shifts in supply can lead to changes in market equilibrium. If supply increases (shifts to the right), it can lead to a lower equilibrium price and a higher quantity sold. Conversely, if supply decreases (shifts to the left), the equilibrium price tends to rise, and the quantity sold typically decreases.
| 3. What factors can cause a shift in the demand curve? | |
Ans. Several factors can cause a shift in the demand curve, including changes in consumer preferences, income levels, the prices of related goods (substitutes and complements), expectations about future prices, and demographic changes. An increase in demand will shift the curve to the right, while a decrease will shift it to the left.
| 4. What is the difference between a change in quantity demanded and a change in demand? | |
Ans. A change in quantity demanded refers to a movement along the demand curve due to a change in the price of the good, while a change in demand involves a shift of the entire demand curve due to factors other than price, such as consumer income or preferences changing.
| 5. How does the concept of elasticity relate to demand and supply? | |
Ans. Elasticity measures how responsive the quantity demanded or supplied is to a change in price. In terms of demand, if a small price change leads to a large change in quantity demanded, demand is considered elastic. For supply, elasticity indicates how much the quantity supplied will change with price changes. Understanding elasticity helps businesses and policymakers make informed decisions regarding pricing and production.
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Apr 18, 2026 Last updated
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