Page 33 - DECO405_MANAGERIAL_ECONOMICS

Managerial Economics

Notes (c) Shoes and socks are ………………goods.
(d) The most basic source of demand is……………of the individuals.
(e) The shape of the demand curve is………………sloping.

2.5 Review Questions

1. Define ‘demand’. Discuss different types of demand.
2. Explain the law of demand. Discuss some practical applications of law of demand.

3. Distinguish between direct and derived demand with help of suitable examples.
4. Examine the impact of increase in prices of a good on its:
(a) Substitutes
(b) Complements

5. "Demand for everything in this world is a derived demand." Discuss
6. It is generally believed that when fares of airlines go up, the demand for railway travel
also goes up? Does this seem logical to you?

7. Explain the downward sloping shape of demand curve.
8. It was noticed that even though the price of salt went up, there was no fall in demand. Can
you explain, why?
9. Explain the income effect and substitution effect with help of suitable examples.

10. Draw a demand curve based on following data- Number of units demanded of X: 35, 46, 67,
89, 90 and 120 and respective prices: 40, 45, 50, 55, 60 and 65.

Answers: Self Assessment

1. (a) False (b) False (c) True (d) True
(e) True (f) False
2. (a) Positive (b) Derived (c) Complementary (d) Need
(e) Downward

2.6 Further Readings

Books Dr. Atmanand, Managerial Economics, Excel Books, Delhi.
Hague, D.C., Managerial Economics.
Haynes, Mote and Paul, Managerial Economics–Analysis and Cases, Vakils. Fellner
and Simons Private Ltd., Bombay.
Malcolm P. McNair and Richard S. Meriam, Problems in Business Economics, McGraw-
Hill Book Co., Inc.

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