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Theory Of Consumer Behaviour
Question
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What is meant by cross price effect? Give two examples.

Answer

It is effect of change in price of one product on quantity demanded of other product. It happens in case of related goods. When price of petrol rises, demand for cars falls. When price of coffee rises, demand for tea rises.

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Some More Questions From Theory Of Consumer Behaviour Chapter

What are two approaches to attain the state of consumer's equilibrium?

Define indifference curve.

What is meant by marginal rate of substitution (MRS)?

 Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

Give meaning of demand.

 Name two determinants of demand.

List the factors that cause changes in demand.

What is law of demand?

What is demand schedule?