CBSE > Class 12 > Economics | CBSE Board | Homework Help

Downward slope of demand curve indicates that more is purchased in response to fall in price and vice-versa. Thus, there is inverse relationship between own price of a commodity and its quantity demanded.

This is attributed to the following factors:
(i) Law of Diminishing Marginal Utility
According to this law, as the 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 the 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 and vice-versa.
(iii) Substitution effect It refers to the substitution of one commodity for the other when it becomes relatively cheaper due to change in relative prices.
(iv) Size of consumer group When price of a commodity falls, it attracts new buyers who can now afford to buy it, hence quantity demanded rises.
(v) Different uses Many goods have alternative uses, e.g. milk is used for making curd, cheese and butter. If price of milk reduces, it will be put to different uses. Accordingly, demand for milk expands.

1Thank You

Kaur S 6 years, 11 months ago

Because of negative relation between demand for a commodity & prices of that commodity ..

2Thank You

ANSWER

Case studies of monopoly market

Posted by Shubhashini Roy 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Vansh Rastogi 6 years, 11 months ago

I think Case studies are not asked in economics, they are only asked in business studies

2Thank You

ANSWER

Assuming that increase in investment is rs 1000 crore and marginal propensity to consume is 0.9 explain the working of multiplier.

Posted by Shivam Saxena 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Madan Batra 6 years, 11 months ago

Value of multiplier will be 10 because K=1/1-MPC so 1/1-0.9= 1/0.1 = 10/1 so, K =10

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ANSWER

How is the revaluation different from appreciation of a currency ?

Posted by Nikhil Kumar 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Sathyanarayana Sairam 6 years, 11 months ago

Revaluation is a significant rise in a county’s official exchange rates in relation to a foreign currency. The process of revaluation can only be done by the central bank of the revaluing country. Appreciation of currency is defined as the increase in the worth of domestic currency as against foreign currency due to the market forces of demand and supply. The only difference is that revaluation is a deliberate action done by the central bank of the country, and appreciation occurs naturally due to the market forces of demand and supply.

2Thank You

ANSWER

When does Average Propensity to Save exceeds zero?

Posted by Nikhil Kumar 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Sathyanarayana Sairam 6 years, 11 months ago

Average propensity to save can exceed zero when the income is greater than consumption i.e, Y>C

1Thank You

ANSWER

What is a individual demand and market demand?

Posted by Steffy Sachin 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Sathyanarayana Sairam 6 years, 11 months ago

Individual demand is defined as the quantity of a commodity demanded by an individual consumer at a given time and at a given price. Market demand is defined as the sum total quantity of a commodity demanded by all the consumers in the market at a given time and a given price. It is similar to the aggregate demand that you learnt in Macroeconomics.

2Thank You

ANSWER

What is rationing of credit by central bank?

Posted by Khushi Jain 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Yogita Ingle 6 years, 11 months ago

Credit rationing means limiting the availability of credit in the market. It is a qualitative measure through which the central bank fixes the credit limit for different business activities in the economy. The main aim of credit rationing is to restrict the flow of credit towards the speculative and illegal activities. No commercial bank can exceed the limit of credit as prescribed by the Central Bank.

2Thank You

ANSWER

when c = 200 + 0.7y and the I = 5500 equilibrium level of income is

Posted by Aditya Garg 6 years, 11 months ago

CBSE > Class 12 > Economics

3 answers

Vansh Rastogi 6 years, 11 months ago

✓Y=C+I ______✓y= (200+0.7y) + (5500) ________✓y-0.7y = 200+5500 _______✓y(1-0.7)= 5700 _______✓0.3y=5700 _______✓y=5700÷0.3 ________✓y=19000 Step by step , hope you understand :)

1Thank You

Aditya Garg 6 years, 11 months ago

How 19000 come

0Thank You

Khushi Jain 6 years, 11 months ago

Equilibrium of income is Y At equlibrium, Y=C+I {AD=AS=Y so AD=C+I} Or, Y 200+0.7Y+5500 (C=200+0.7Y) Y-0.7Y=200+5500 0.3Y=5700 Y=19000 i.e equilibrium level of income

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ANSWER

when price falls demand will increase if prices also rises demand as also rises? do you agree this statement ?gives reason

Posted by Priya Singh 6 years, 11 months ago

CBSE > Class 12 > Economics

3 answers

Madan Batra 6 years, 11 months ago

Yes if we suppose there are 2 goods and are substitute to each other for example tea and coffe if there is increase in price of coffe the demand for tea will also increase

0Thank You

Nikhil Kumar 6 years, 11 months ago

No,demand will not rise as law of demand state that there is negative relationship between quantity demanded and price of the commodity

0Thank You

Nancy Dhanda 6 years, 11 months ago

No, demand does not rise when price rise because their is inverse relationship between price and demand

1Thank You

ANSWER

expenditure of an American citizen who comes in india for medical treatment domestic factors

Posted by Priya Singh 6 years, 11 months ago

CBSE > Class 12 > Economics

0 answers

ANSWER

Define money creation?

Posted by Jnv Vines 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Gaurav Seth 6 years, 11 months ago

The banks have the power to expand or contract demand deposits. This power is called credit creation. It is an important function of the commercial banks.

ILLUSTRATION

For simplicity sake, assume there is a single banking system in the economy. Let the lehal reserve ratio be 20% and there is a fresh deposit of 1000. As required the bank keep 20% that is 200 as cash reserve. Suppose the bank lend the remaining 800, those who borrow use this money for making payments. As assumed those who recieve payments put the money back into the bank. This is the first round creation of deposits.

Borrowers will use the deposits to meet their obligation to their debtors, by paying them cheques drawn on bank. Recipients or debtors of these cheques will deposit the same in thier respective accounts. Thus the bank gets new deposits. They keep 20% of these deposits, i.e, and Rs.160 as cash reserve and lend the remaining Rs.640. ThIs is the second round creation of deposits.

This again creates new deposits of Rs.640 with the bank. Keeping its 20%, the remainder can again be given as loans to other persons. Thus, this process would continue till all excess reserves are exhausted. The money goes on multiplying in this way, and ultimately total money creation is Rs. 5000.

The total credit creation is always equal to the primary deposits multiplied by the reverse of the cash reserve ratio.

Total credit creation = primary deposits x 1/ cash reserve ratio

= 1000 x 1/ 20%

=Rs.5000

In this way banks can give loans many times over and above their cash deposits. That is why banks are called credit creation industries.

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ANSWER

Explain consumers equilibrium by indifference curve analysis.

Posted by Ajay Kashyap 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Riya ? 6 years, 11 months ago

His*

0Thank You

Riya ? 6 years, 11 months ago

Consumer equilibrium refers to optimum choice of the consumer....the consumer reaches hus optimum choice when :(i)MRSxy=Px/py.... (ii) IC is convex to its origin..?

2Thank You

ANSWER

When slope of demand curve is infinity elasticity of demand will be

Posted by Rupender Chauhan 6 years, 11 months ago

CBSE > Class 12 > Economics

3 answers

Ravish Choudhry 6 years, 11 months ago

Perfectly elastic

1Thank You

Dheerendra Kalani 6 years, 11 months ago

When there will no change in price and unwanted fluctuations in demand or unwanted response of demand of the commodity in the market .

0Thank You

Krishanu Saxena 6 years, 11 months ago

When change in demand is greater than change in price

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ANSWER

Cut -throat competition is a feature of

Posted by Rupender Chauhan 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Muskan Khatri 6 years, 11 months ago

its monopolistic market

0Thank You

Vansh Rastogi 6 years, 11 months ago

I think perfect competition

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ANSWER

how can we relate to marginal substitution with marginal utility

Posted by Poonam Goyal 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Sathyanarayana Sairam 6 years, 11 months ago

Marginal rate of substitution is only an extension of law of diminishing marginal utility. Marginal rate of substitution is the rate at which the consumer is willing to sacrifice additional units of Good-Y in order to increase the consumption of good-X. You can relate it to marginal utility as with the consumption of each additional unit of good X, the marginal utility derived from each unit keeps declining, and the consumer will decrease the consumption of good X. This is because the law of diminishing marginal utility states that "as more and more units of good-Y are sacrificed for the consumption of additional units of good-X, the marginal utility derived from each succesive unit keeps declining."

1Thank You

ANSWER

What is indifference curve & its properties

Posted by Manjeet Sikarwar 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

A N 6 years, 11 months ago

Indiffrence curve show vorious combination of two goods in which consumer is indiffrence .each combination gives him same level of satisfaction to consumer PROPERTIES 1)indiffrenc curve always slope downword 2)it is covex to origin 3)higher indiffrenc curve give high level of satisfaction 4)indiffrence curve never intersract each other 5)indiffrenc curve may or may not be parallel to each other

2Thank You

Mohd Abdulla 6 years, 11 months ago

Indifference curve refer to the graphical representation of bundles of two goods among which the consumer is indifferent.... Its properties are 1... slope downward.because of inverse relation between the commodity.. 2.....convex to the origin because of decreasing MRS.. 3.... higher indifference curve shows higher level of satisfication.. 4..... indifference curve never intersect eachother....

2Thank You

ANSWER

Give the meaning and implications of price floor.

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Vansh Rastogi 6 years, 11 months ago

Price flooring is the minimum price fixed by government to protect sellers(especially farmers) in case of exess supply.

1Thank You

ANSWER

Different between increase in supply and increase in quantity supplied.

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Gaurav Seth 6 years, 11 months ago

1.“Supply” is a general and fundamental aspect in the study of economics while “quantity supplied” is only a component of the supply. “Supply” is one of the terms used to illustrate the entire relationship between the price and the quantity. In contrast, “quantity supplied” is a specific term for a specific amount of quantity and a specific market price.

2.The supply is the whole relationship of the quantity and price while the quantity supplied and its matching price is only a part of the supply relationship. “Supply” includes all the possible market prices and the amount of quantity while “quantity supplied” only deals with one specific market price and amount of quantity.

3.The counterpart of “supply” is “demand” while the corresponding term for “quantity supplied” is “quantity demand.”

4.A change or shift in the supply curve affects all components while changes in the quantity supplied have a minimal effect.

5.A quantity supplied (with its corresponding price) is a component of a supply curve. A number or collection of the quantity supplied can construct a supply curve.

6.A change in the supply is characterized as a “shift,” while a change in the quantity supplied is marked by an upward line or movement from the previous quantity supplied with its matching price to another quantity supplied and its corresponding price.

1Thank You

ANSWER

Different between cardinal utility analysis and ordinal utility analysis.

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Muskan Khatri 6 years, 11 months ago

Actually, as per NCERT Cardinal approach is given by Alfred Marshell and Ordinal is given by John Hicks and Allen

0Thank You

Gaurav Seth 6 years, 11 months ago

<th>BASIS FOR COMPARISON</th> <th>CARDINAL UTILITY</th> <th>ORDINAL UTILITY</th>

Meaning	Cardinal utility is the utility wherein the satisfaction derived by the consumers from the consumption of good or service can be expressed numerically.	Ordinal utility states that the satifaction which a consumer derives from the consumption of good or service cannot be expressed numerical units.
Approach	Quantitative	Qualitative
Realistic	Less	More
Measurement	Utils	Ranks
Analysis	Marginal Utility Analysis	Indifference Curve Analysis
Promoted by	Classical and Neo-classical Economists	Modern Economists

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ANSWER

Different between positive and normative economic.

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Krishanu Saxena 6 years, 11 months ago

In positive economy we can verify the facts and figures but in normative economy we can't verify the facts and figures.

0Thank You

ANSWER

Explain the law of diminishing marginal utility with the help of a hypothetical numerical example.

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Priya Sheoran 6 years, 11 months ago

Law of diminishing marginal utility states that why other things remaining constant the marginal utility of a commodity with decrease due to continuous consumption of that commodity. Formula=loss of commodity Y/gain of commodity X

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ANSWER

Define explicit cost

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Krishanu Saxena 6 years, 11 months ago

Payments to the outsiders.

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ANSWER

Define opportunity cost

Posted by Yogesh Saini 6 years, 11 months ago

CBSE > Class 12 > Economics

4 answers

Dheerendra Kalani 6 years, 11 months ago

It is the cost of availing next best alternative and it can only be felt.

0Thank You

Mohd Abdulla 6 years, 11 months ago

Next best alternative forgone is known as opportunity cost...

0Thank You

Gaurav Seth 6 years, 11 months ago

An opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. In other words,
the cost of enjoying more of one good in terms of sacrificing the benefit of another good is termed as opportunity cost of
the additional unit of the good.
Example: We have Rs 15,000 with two choices a) to invest in the shares of a company XYZ or b) to make a fixed deposit
which gives interest 9%. If the company XYZ gives a return of 15%, we will benefit when we invest in the shares as the
alternative would be less profitable. However if company’s return is only 3% when we could have made a return of 9%
from FD, then our opportunity cost is (9% - 3% = 6%).

0Thank You

Vansh Rastogi 6 years, 11 months ago

Cost of availing one opportunity in terms of loss of the other

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ANSWER

Which type of questions aruse from price determination with simple application

Posted by Mansi Dubey 6 years, 11 months ago

CBSE > Class 12 > Economics

0 answers

ANSWER

What is net subsidy?

Posted by Prakash Singh 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Dheerendra Kalani 6 years, 11 months ago

Net subsidy is nothing it is net indirect tax i.e tax_subsidy

0Thank You

Vansh Rastogi 6 years, 11 months ago

Subsidy-tax

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ANSWER

Viva question on demand

Posted by Neha Jat 6 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Dheerendra Kalani 6 years, 11 months ago

Most important elasticity of demand and exceptions of law of demand as well as determinants of demand.

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ANSWER

how rate of exchange is determined in foreign exchange market

Posted by Rashmi Gupta 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Ritik Bhusri 6 years, 11 months ago

Flexible exchange rate system where prices are determined by the free market forces of demand and supply for foreign exchange

1Thank You

Muskan Khatri 6 years, 11 months ago

when the demand of country's good or services rises in the international market, this leads to rise in value of own country. say exchange rate is $1 = ₹70... people buy shares or start investing in our country then the exchange rate will be in favour because of rise in demand.... rate will change to $1 = ₹65 ... Where as if people start extracting their interest or do disinvestment then the exchange rate will be in the favour of dollars because of fall in demand, it will lead to $1= ₹75.. or so thus rates fluctuate every minute,..... and we count the rate at the end of the day.

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