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Home Questions 3FJGHYFJTS
Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Identify the statement which is not correct regarding consumer behaviour and demand.

Options:

The demand for petroleum products is highly inelastic

Utility is expressed in utils

Downward movement along a demand curve takes place due to increase in price of the commodity

In perfectly inelastic demand, the demand curve is parallel to Y-axis

Correct Answer:

Downward movement along a demand curve takes place due to increase in price of the commodity

Explanation:

The correct answer is option (3) : Downward movement along a demand curve takes place due to increase in price of the commodity

This statement (3) is incorrect because a downward movement along a demand curve actually takes place due to a decrease in the price of the commodity, not an increase. A downward movement along the demand curve indicates that as the price falls, the quantity demanded increases.

Let's explain why the other options are correct:

☀ The demand for petroleum products is highly inelastic: This is correct. The demand for petroleum products is considered highly inelastic because consumers tend to buy relatively the same amount regardless of price changes. This is due to the essential nature of petroleum products in transportation, heating, and industrial processes.

☀ Utility is expressed in utils: This is correct. Utility, which measures the satisfaction or pleasure derived from consuming a good or service, is often expressed in arbitrary units called "utils." This is a theoretical construct used in economics to quantify and compare the utility derived from different goods and services.

☀ In perfectly inelastic demand, the demand curve is parallel to the Y-axis: This is correct. In the case of perfectly inelastic demand, the quantity demanded remains constant regardless of the price changes. Therefore, the demand curve is a vertical line parallel to the Y-axis, indicating that consumers will buy the same amount of the product no matter what the price is.

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