Question

1) Due to the floods in the village, the demand for various commodities declined even

through prices remained constant.identify and explain the concept from the given illustrution?​

Answer 1

Answer:

Due to the floods in the village, the demand for various commodities declined even .through prices remained constant

Explanation:

Decrease in demand is a condition when the demand for good decreases due to a change in factor other than the price of the commodity. Accordingly, less is purchased even when the price is constant. Some of the factor causing decrease in demand are decrease in income, moving of taste and preferences away from the commodity and rise in prices of other goods.

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Answer 2

There are various externalities that are responsible for the sale of a particular product. In case of floods in the village, the breach in the elasticity of demand can be due to the fact-

• 1. The income of people has declined after the flood so they don’t have purchasing power in case even if the cost remains the same.

• 2. Due to the floods in the village the linkages involved in the supply of the product can be hampered so that the product is not able to reach on time thus, there will be a decline in the demand of goods.

• 3. Another case can be that the product is no longer needed after the influx of a calamity like in case of flood, people will no longer buy bicycles.

• 4. Also, after a natural disaster like flood the connectivity to the markets will surely be disturbed.

Hence, even after the selling price of goods remains the same the demand of the same can be severely hampered after any calamity.