when onion price hits hard the poor man simply stops buying it.explain the economics of it,using utility analysis
Answers
Answer :-
When the price of the onions are increased, the poor man stops buying it. The higher the price of onions, The lower the quantity of onions are demanded.
Explanation :-
The two important economic terms are demand and supply.
DEMAND -
Demand is the quantity of certain goods which are desired by the consumers from the market.
THE LAW OF DEMAND -
This is a inverse relationship between the prices of goods and it's demand . If the price of the goods rise then their demand will fall . In other words , The higher the price , The lower the quantity demanded.
SUPPLY-
Supply is the quantity of certain goods or services which are provided by the desired suppliers to the market.
THE LAW OF SUPPLY -
This is a direct relationship between the prices of goods and it's supply . If the price of the goods rise then their supply will also rise . In other words , The higher the price , The higher the quantity supplied.
Explanation for given question :-
when onion price hits hard the poor man simply stops buying it.
It means when the price of the onions are increased, the poor man stops buying it. The higher the price of onions, The lower the quantity of onions demanded.
As per the law of demand the demand for the goods decreases when the price rises and when the price decreases the consumption of the same goods increases.
Therefore, following the law of demand, when the price of onion increases the poor man stops merely buying them or buy in less quantity.
This is also related to the economic conditions of the people and the poor man always finds it tight to manage the price rise and stops buying onions.