SVKM’s NMIMS
NMIMS
Global Access – School for Continuing Education
Course: Business
Economics
SEM - I
Programme :
DBM/PGDBM /DHRM
/ PGDHRM / DMM /PGDMM DFM / PGDFM / DBFM
/ PGDBFM / DSCM / PGDSCM/ DITM/ PGDITM
Assignment
Marks: 30
Instructions:
- All Questions carry equal marks.
- All answers to be explained in not more than 1000 words. Use examples as far as possible.
- All answers to be written individually. Discussion and group work is not advisable.
- Copying from websites or e-books will carry negative marks.
- Explain (using example) the law of Demand. Also, explain the difference between the law of demand and law of supply.
Demand: Demand is the desire,
want or need to purchase a good or service at a given price.
Types of Demand :
-
Individual
vs Market demand
-
Company
vs Industry demand
-
Market
segment Vs Total Market
-
Domestic
vs National Demand
-
Direct
vs derived demand
-
Autonomous
vs Induced demand
-
New vs Replacement demand
-
Household
vs corporate vs government demand
Demand depends on a number of influence factors
-
Price
-
Income
-
Consumer
Preferences
-
Income
of the consumers
-
Price
of the related goods
-
Estimation
of future price and income
-
Advertising
expenditure
-
Life
, fashion, religion, tradition
Law
of demand: It explains the relationship between price and quantity demanded of a
commodity. It says that demand varies inversely with the price. This law can be
explained in the following manner:
“Keeping other factors that affect demand
constant, a fall in price of a product leads to increase in quantity demanded
and a rise in price leads to decrease in quantity demanded for the product”
The law can be expressed in mathematical terms
as “Demand is a decreasing function of price” symbolically , thus D = F(p) where D
represents Demand, P stands for
Price and F denotes the Functional relationship. The Law explains the cause and
effect relationship between the independent variable and dependent variable.
The law explains only the general tendency of consumers while buying a product.
A consumer would buy more when price falls due to the following reasons:
1.
A
product become cheaper
2.
Purchasing
power of a consumer would go up
3.
Consumers
can save some amount of money
4.
Cheaper
products are substituted for costly products
Important Features of Law of demand
1.
There
is an inverse relationship between price and quantity demanded.
2.
Price
is an independent variable and demand is dependent variable
3.
It
is only a qualitative statement and as such it does not indicate quantitative
changes in price and demand
4.
Generally
the demand curve slops downward from left to right.
The operation of the law is conditioned by the
phrase “Other things being equal”. It indicates that given certain conditions,
certain results would be valid only when testes and preferences , customs and
habits of consumers , prices of related goods and income of consumers would
remain constant.
The negative slope of the demand curve is
5.
Income
Effect
6.
Substitution
Effect
7.
Giffen
Paradox
Exception
to the law of demand
Exception
to the law of demand states that with a fall in price , demand also falls and
with a rise in price demand also rises.
Special
Case of Veblen goods
- Explain (with the help of diagram & examples) different types of short run and log run costs. Also, explain (with the help of examples for each) the different type of economies and diseconomies scale.
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