ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When quantity demanded of a commodity increases due to decrease in own price of the commodity, other factors remaining constant, it is a situation of extension of demand.

Detailed explanation-2: -Demand is generally considered to slope downward: at higher prices, consumers buy less. The point at which the two curves intersect represents the market-clearing price-the price at which demand and supply are the same. Prices can change for many reasons (technology, consumer preference, weather conditions).

Detailed explanation-3: -As we can see on the demand graph, there is an inverse relationship between price and quantity demanded. Economists call this the Law of Demand. If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases.

Detailed explanation-4: -False. Increase in demand refers to increase in quantity demanded of a commodity at its existing price, due to change in other factors. It is a situation of forward shift in the demand curve and not of extension of demand curve, which takes place along the demand curve due to fall in price of the commodity.

Detailed explanation-5: -Price of product. Tastes and preferences. Consumer’s income. Availability of substitutes. Number of consumers in the market. Consumer’s expectations. Elasticity vs. inelasticity.