Question

I. Please Fill the Underlined Blanks: answer in the right-most red colored cell, 1-1. What is competition? A competitive market refers to a market in which there are so many buyers and sellers that each has impact on the market place. There are other forms of markets: market, Oligopolistic market 1-2. What is the Law of Demand? It states, when the price of a good goes updown), people always buy of i, other things being equal 1-3. Shifts in Demand A good for which an increase in income leads to an increase in demand, is called A good for which an increase in income leads to a decrease in demand, is called Two goods for which increase in price of a good leads to an increase in demand for the other, are called Two goods for which increase in price of a good leads to a decrease in demand for the other, are called good good

Answer 1

1. (a) No impact on market price (Reason: Too many buyers and sellers, nobody by itself can affect the price. eg: Fruit market) (b) Monopolistic market (Only one seller)

2. Price goes up-> Demand Decreases, prices goes down, Demand Increases. This is inverse law of demand.

3. Increase in income leads to inc in Demand: NORMAL Good
Increase in income leads to dec in Demand: INFERIOR Good
  Increase in price of one, leads to increase in demand for another: SUBSTITUTE
  Increase in price of one, leads to decrease in demand for another: COMPLEMENTARY Goods.

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