ts. Indicate
crease or
EI
1. Given below are four statements. India
for each whether it reflects an increase
decrease in:
demand; quantity demanded; supply.
quantity supplied.
() Air Deccan reduces its average plan
fare by 30% in order to attract more
passengers.
(11) The Government grants export subsidu
to producers of oranges in Nagpur to
increase the sale of oranges abroad.
(iii) Wheat farmers decide to withhold wheat
as the market price is low.
(iv) OPEC decides to increase the international
oil price.
Answers
I) Increase in demand
II) Increase in supply
III) Decrease in quantity supplied
IV) Decrease in quantity demand
Explanation:
In the first instance,as Air Deccan reduces its average plan fare,the overall demand for Air Deccan air tickets will increase signifying an increase in market demand.
In the second case,the government export subsidy is a non-price support to the producers of oranges.There is no change in price and so quantity supplied will not change and the overall supply will increase.
In the third case,if the wheat producers stop supply due to low price,the quantity supplied will drop as here we have a change in product price and any change in product price will affect quantity supplied.
Finally,OPEC decision to raise the international oil price also reflects a price change in the market which will reduce the quantity demanded by the consumers.As again,there is a price change in the market,quantity demanded will be affected.