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Theory Of Consumer Behaviour

Question

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'If a product price increases, a family's spending on the product has to increase.' Defend or refute.

Solution

The answer depends upon two factors namely (i) Elasticity of demand, and (ii) Availability of substitute. If demand for the product whose price has increased is inelastic and the product has no substitute, a family's spending will increase. On the other hand, if demand is elastic or the product's substitutes are available, a family's spending need not increase.

Some More Questions From Theory Of Consumer Behaviour Chapter

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?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

What is meant by one good being substitute of other?

What is meant by one good being complementary to another.

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