CLASS XI

DPS INDIRAPURAM

ASSIGNMENT-4, DEMAND

Read the following text carefully and answer the question 1-2 on the basis of the same:-

If the prices of other goods, the consumer’s income and her tastes and preferences remain
unchanged, the amount of a good that the consumer optimally chooses, becomes entirely
dependent on its price. The relation between the consumer’ optimal choice of the quantity of a
good and its price is very important and this relation is called the demand function. Thus, the
consumer’s demand function for a good gives the amount of the good that the consumer chooses at
different levels of its price when the other things remains unchanged. The graphical representation
of the demand function is called the demand curve. The relation between the consumer’s demand
for a good and the price of the good is likely be negative in general. In other words, the amount of a
good that a consumer would optimally choose is likely to increase when the price of the good falls
and it is likely to decrease with a rise in the price of the good.

1. Cross price effect occurs in case of substitute goods, and not in case of complementary goods.
Comment.

2. Why do people buy more at less prices? Give any 3 such reasons.

READ THE FOLLOWING HYPOTHETICAL INFORMATION CAREFULLY AND ANSWER THE QUESTIONS
1-6

PRICE DEMAND
5 10
5 8
5 12
3. On the basis of the data given above when the demand changes from 10 units to 8 units, the
situation will be called________________

a. Increase in demand

b. Decrease in demand

c. Extension of demand

d. Contraction of demand

4. on the basis of your answer of the above, what will be the shape of new demand curve?

a. Demand curve shifts to the left.

b. Demand curve shifts to the right.

c. There is downward movement along the demand curve.

d. There is upward movement along the demand curve.

5. on the basis of the data given above when demand changes from 10 to 12 units, this situation will
be called_________________________

a. Increase in demand
b. Decrease in demand

c. Extension of demand

d. Contraction of demand.

6. On the basis of your answer of the above question, what will be the shape of the new demand
curve?

a. Demand curve shifts to the left

b. Demand curve shifts to the right.

c. There is downward movement along the demand curve.

d. There is upward movement along the demand curve.

7. Read the following statements carefully and choose the correct alternatives among those given
below:

Statement-1: Shift in demand curve shows extension or contraction of demand.

Statement 2:- movement along the demand curve is indicated by upward or downward movement
along the same demand curve.

ALTERNATIVES:-

a) Both the statements are true

b) Both the statements are false.

c) statement 1 is true and statement 2 is false.

d) statement 2 is true and statement 1 is false.

8. On the basis of the data given above when the demand changes from 10 units to 8 units, we
assume that________________________

a. Own price of the commodity is constant

b. Other determinants of demand(other than own price of the commodity) are constant

c. Other determinants of demand(including own price of the commodity) are constant

d. None of these.

Q9 Give valid reasons, state whether the following statements are true or false:

a. An increase in the income of a consumer would lead to an increase in demand for all types of
goods demanded by him.

b. If good A and B are substitute, a rise in price of A will result in a rightward shifts in the demand
curve of B

Q10 Identify the types of goods as represented in the picture below. Also, explain the effect of rise in
price of each good on demand curve of given good.
Picture -A Picture-B

Q11 With the help of a diagram, show various elasticities of demand.

Q12 Price elasticity of demand of two goods A and B is (-)3 and (-) 4 respectively. Which of the two
has higher elasticity and why?