Question

consumer buys 100 units at price 10rs due to fall in the price by 5rs quantity demanded increases by 100 units​

Answer 1

Answer:

The relationship between TU and MU is as under:

(i) TU increases as long as MU is positive.

(ii) When MU is zero, TU is maximum.

(iii) TU also starts falling when MU becomes negative.

TU and MU Curves

In the above diagram, TU is increasing up to point M since MU is positive till N. TU is maximum at M when MU is zero and after M, TU starts falling since MU has become negative.

Q 2. Distinguish between ‘increase in demand’ and ‘increase in quantity demanded’ of a commodity.

Ans. When demand rises at the same price it is called ‘increase in demand’. When demand rises due to fall in price it is called ‘increase in quantity demanded’.

Explanation: