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SS1: Economics – Theory of Demand & Supply I | Theory Questions

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Question 1

 With good illustration explain the difference between demand and want.

Demand refers to the desire for a commodity which is backed up by the ability to pay for it while want refers to the desire for a commodity which is not backed up by the ability to pay for it.

Question 2

State the law of demand.

the first law of demand states that the higher the price of a commodity, the lower the quantity demanded or vice versa, ceteris paribus.

Question 3

What are the factors affecting demand?

Factors affecting Demand

  1. Price of the commodity
  2. Taste, fashion, and tradition
  3. Consumer’s income
  4. Price of other commodities
  5. Size of the population
  6. Taxation
  7. Period of festival
  8. Government policy
  9. The expectation of future rise in price
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