Economics Questions and Answers – Part9

161. What are derived demand?
Demand is said to be derived when it is tied to the demand for some ‘parent’ product.

162. What are autonomous demand?
When the demand for a commodity is entirely independent of demand for any other commodities it is autonomous demand.

163. What are industry demand?
Industry demand means the demand for the product of a particular industry. E.g. demand for tyres produced by all tyre companies in India is the Indian tyres industry demand.

164. What are company demand?
Company demand denotes the demand for the product of a particular firm or company. E.g. demand for tyres produced by MRF Tyres limited is a company demand.

165. What are Giffens goods or inferior goods?
Cheap food stuffs are an example of Giffens goods. In the case of inferior goods, people buy more of such good when their price rises. This an exception to the law of demand.

166. What is elasticity demand?
The rate at which demand changes when price changes is known as elasticity of demand.

167. What is cross elasticity?
Cross elasticity of demand is the degree of responsiveness of demand for a commodity to the changes in the price off its substitutes and complements.

168. What is short term demand?
The short term demand may be referred to the demand for a product where adjustment takes place in response to change in the short term factors like price changes, income changes etc.

169. What is long term demand?
The long term demand for products is influenced by changes in long term factors such as changes in technology, arrival of substitutions, influence in population etc.

170. What are superior goods?
Goods whose demand increases with increase in income are known as superior goods or normal goods.

171. What are inferior goods?
Goods whose demand decrease when consumers income increases are known as inferior goods.

172. What is income elasticity of demand?
Income elasticity of demand measure the rate of change in demand in response to given rate of change in income.

173. What are perfectly elastic demand?
Demand for a commodity is said to be perfectly elastic when a slight change in price cause infinite change in quantity demanded.

174. What is perfectly inelastic demand?
Demand for a commodity is said to be perfectly inelastic when quantity of the commodity demanded remains the same irrespective of any rise or fall in price

175. What are the important purposes of long term forecasting?
1. To plan a new unit or expansion of a new unit
2. To plan a long term financial requirements
3. To plan man-power requirements

176. In methods of demand forecasting for new products, what is a sales experience approach?
In this case the new product is offered in a sample market. Then by studying the demand of the sample markets, the total demand is estimated.

177. In the criteria of a good forecasting method, what is durability?
This implies that the forecasting made should hold good over a period. Durability of a forecast depends on the reasonableness and simplicity of functions filled.

178. What is mean by the expression marginal product?
The word marginal means additional. Marginal product is the extra output resulting from the employment of one more unit of a factor of production land, labour or capital.

179. What is an iso-quant?
Iso-quants are equal product curves. They show the combination of the factors of production yielding the same level of output. Iso-quant shows the combination of two variable inputs that given the same level output.

180. What is meant by historical costs?
Historical cost is the original cost of an asset. In other words it is the actual cost incurred on acquiring a particular cost.

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