Question

Q34. Downward movement of demand curve occurs when LD a) Price of the commodity increases x b) Income of the consumer increases Xb)Price of the commodity decreases xd)Taste of consumer becomes favourable​

Answer 1

Answer:

Demand Transfer

Explanation:

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Answer 2

Explanation:

Downward slope of demand curve indicates that more quantity is purchased in response to fall in price. Thus, there is inverse relationship between own price of a commodity and its quantity demanded. This may be explained in terms of the following factors : 

(i) Law of diminishing marginal utility : According to this law, as consumption of a commodity increases, the utility from each successive unit goes on diminishing. Accordingly, for every additional unit to be purchased the consumer is willing to pay less price. 

(ii) Income effect : Change in own price of a commodity causes a change in real income of the consumer. With a fall in price, real income increases. Accordingly, demand for the commodity expands. 

(iii) Substitution effect : When price of commodity X falls, it becomes cheaper in relation to commodity Y. Accordingly, X is substituted for Y and demand of X increases. 

(iv) Size of consumer group : When price of commodity decrease, it attracts new consumers who now can afford to buy it. Accordingly, demand extends. (v) Price effect : A change in demand caused by a change in price is called ‘price effect’. When price of a good decreases, the good becomes cheaper. Then the consumer buys more of that good.