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Theory Of Consumer Behaviour

Question

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Explain relationship between demand and prices of related goods (i.e. substitute good/ complementary good).

Solution

Solution not provided.

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Hint, (i) In case of substitute goods, there is direct relationship between demand for a given good (say coffee) and price of its substitute (say tea), (ii) In case of complementary good there is inverse relationship between demand for a given good (say scooter) and price of its complementary good (say petrol).

Some More Questions From Theory Of Consumer Behaviour Chapter

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?

Why does demand curve slope downwards?

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