ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.

Detailed explanation-2: -The income effect, in microeconomics, is the resultant change in demand for a good or service caused by an increase or decrease in a consumer’s purchasing power or real income.

Detailed explanation-3: -The substitution effect occurs when the price of a good falls, consumers will substitute it for other goods, which are now relatively more expensive.

Detailed explanation-4: -The law of demand states that consumers buy more of a good when its price decreases and less when its price increases. The law of demand is the result of two separate behavior patterns that overlap, the substitution effect and the income effect.

Detailed explanation-5: -A change in quantity demanded refers to a change in the specific quantity of a product that buyers are willing and able to buy. This change in quantity demanded is caused by a change in the price.