Question : Law of Demand violations include:
Option 1: Substitution effect is negative
Option 2: Income effect is negative
Option 3: Negative income effect is less than substitution effect
Option 4: Negative income effect is greater than substitution effect
Correct Answer: Negative income effect is greater than substitution effect
Solution : Income effect is greater than substitution effect in giffen goods. Giffen goods are the exceptions to the law of demand. GIffen goods are those incredibly subpar products that, even if their prices go down, their demand goes down. Giffen products have a strong negative income effect, which indicates that when buyer income rises, so does consumer demand for these products. Hence option d is the correct answer.
Question : The law of demand states that when _____.
Option 1: income and price rise demand rises
Option 2: income rises demand rises
Option 3: price rises demand rises
Option 4: price falls demand rises
Question : The Psychological Law of Consumption states that
Option 1: proportionate increase in consumption is less than a proportionate increase in income.
Option 2: increase in income is equal to an increase in consumption.
Option 3: increase in consumption is greater than the increase in income.
Option 4: consumption does not change with a change in income.
Question : What is the First Law of Gossen?
Option 1: Law of Equi-marginal utility
Option 2: Law of Diminishing marginal utility
Option 3: Law of supply
Option 4: Law of demand
Question : The Law of Demand is calculated from the perspective of :
Option 1: Consumer
Option 2: Supplier
Option 3: Wholeseller
Option 4: Shopkeeper
Question : Law of Demand states that there is a negative relationship between ______.
Option 1: demand for a commodity and its supply
Option 2: demand for a commodity and its price
Option 3: tax on a commodity and its price
Option 4: supply of a commodity and its price
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