BBA 1st Year Demand Theory Very Short Question Answers Study Material

BBA 1st Year Demand Theory Very Short Question Answers Study Material

BBA 1st Year Demand Theory Very Short Question Answers Study Material

BBA 1st Year Demand Theory Very Short Question Answers Study Material

BBA 1st Year Demand Theory Very Short Question Answers Study Material

Q.1. What do you mean by demand?

Ans. Demand refers to the quantity of goods or services that consumers are willing and able to purchase at various prices during a period of time.

Q.2. What are the four factors that affect the demand?

Ans. The four factors affecting the demand are as follows:

(a) Price of a commodity.

(b) Price of other related commodity.

(C) Level of income.

(d) Taste and preference.

Q.3. Write down the other factors of demand.

Ans. The other factors of demand are :

(a) Government policy.

(b) Advertisements.

(c) State of an economy.

(d) Demographic pressure.

Q.4. What are the factors affecting the market demand?

Ans. The factors affecting the market demand are:

(a) Growth of population.

(b) Climate and weather conditions.

(C) Advertisement.

(d) Government policy.

(e) Distribution of income and wealth.

Q.5. Write any four determinants demand of non-durable consumer’s goods.

Ans. The four determinants demand of non-durable goods are :

(a) Purchasing power of consumers.

(b) Price of substitute goods.

(C) Price of complementary goods.

(d) Standard of living of consumers.

Q.6. What are the four main factors determining demand of cement during next five years in India?

Ans. The four factors determining demand of cement are :

(a) Distribution of wealth in the country.

(b) Employment opportunities.

(C) Development in the field of agriculture.

(d) Prices of cement.

Q.7. What do you mean by law of demand?

Ans. Law of demand explains the relationship between price and demand of a commodity. It has been a practical experience that when the price of a commodity increases, its demand decreases and vice versa. So there is an inverse relationship between price and demand of a commodity. This relationship is explained by the law of demand, i.e.the quantity demanded varies inversely with price

Q.8. Mention any two essentials of the law of demand.

Ans. The two essentials of the law of demand are :

(a) There is an inverse relationship between prices and demand of a commodity.

(b) It is only a qualitative statement and not a quantitative statement.

Q.9. Write any three assumptions of the law of demand.

Ans. The three assumptions of the law of demand are :

(a) There should be no change in the income of consumer.

(b) There should be no change in the price of related goods.

(C) The commodity should not be a prestige commodity.

Q.10. What are the exceptions of law of demand?

Ans. ‘There are some exceptions to the law of demand. It means there are some commodities whose demand extends when prices rise and contracts when prices fall. Demand curve of such commodities slopes upward from left to right.

Q.11. Define ignorance.

Ans. Many a time, consumers make a poor judgment and consider a commodity to be of low quality if its price is low and of high quality if its price is high. This type of thinking is called ignorance.

Q.12. What is brand loyalty?

Ans. If a consumer is loyal to a particular brand of commodity, he will not like to change the brand even on a change in its price. It is called his brand loyalty..

Q.13. What do you understand by elasticity of demand?

Ans. Elasticity of demand is the ratio or percentage change in quantity demanded of a commodity in response to change in price, income or price of other related goods. Hence, elasticity expresses the degree of correlation between demand and price. It indicates the responsiveness of demand to changing prices.

Q.14. Write the formula of price elasticity of demand.                           

(2013)

Ans. Price elasticity of demand =Proportionate change in quantity demanded

                                                              Proportionate change in price

Q.15. What are the five degrees of price elasticity of demand?

Or

Write the name of ‘types of demand.’

 Ans. Following are the five degrees of price elasticity of demand :

(a) Perfectly elastic demand.

(b) Perfectly inelastic demand.

(C) Unit elastic demand.

(d) More elastic demand.

(e) Less elastic demand.

Q.16. Write down the four factors affecting the elasticity of demand.

Ans. The four factors affecting the elasticity of demand :

(a) Nature of commodity.

(b) Availability of substitutes.

(c) Different uses of commodity. 

(d) Postponement of the use of commodity.

Q.17. What are the main methods of determining price elasticity of demand?

Ans. Following are the main methods of determining price elasticity of demand :

(a) Total expenditure method.

(b) Percentage or proportionate method.

(c) Point method.

Q.18. What are the four main importance’s of elasticity of demand in business decisions?

Ans. The four main importance’s of elasticity of demand in business decisions are:

(a) It is helpful in price determination (

b) It is helpful in price discrimination.

(c) It is important in international trade.

(d) It explains the paradox of poverty amidst policy.

Q.19.  Define income elasticity of demand.

Ans. Income elasticity of demand is the rate of change in quantity with respect to change in income. Other factors remaining constant.

Q.20. What is negative income elasticity of demand?

Ans. When quantity demanded of a commodity decreases with increase in income of consumer and increase with fall in income, the income elasticity is said to be negative income elasticity of demand.

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