CBSE Class 12 Economics Chapter 3: Demand NCERT Solutions

To find the market demand function, we need to sum the individual demand functions of the two consumers. We must also consider the price ranges for which each consumer's demand is defined.

Consumer 1's demand: \(D_1(p) = 20 - P\) for \(P < 20\), and \(D_1(p) = 0\) for \(P \ge 20\).

Consumer 2's demand: \(D_2(p) = 30 - 2P\) for \(P < 15\), and \(D_2(p) = 0\) for \(P \ge 15\).

The market demand function, \(D_{\text{market}}(P)\), is the sum of individual demands: \(D_{\text{market}}(P) = D_1(P) + D_2(P)\).

We need to consider different price ranges:

1. For \(P < 15\): Both consumers demand the good. \(D_{\text{market}}(P) = (20 - P) + (30 - 2P) = 50 - 3P\).
2. For \(15 \le P < 20\): Consumer 1 demands the good, but Consumer 2 demands 0. \(D_{\text{market}}(P) = (20 - P) + 0 = 20 - P\).
3. For \(P \ge 20\): Both consumers demand 0. \(D_{\text{market}}(P) = 0 + 0 = 0\).

The market demand function is therefore piecewise:

\(D_{\text{market}}(P) = egin{cases} 50 - 3P & \text{if } P < 15 \ 20 - P & \text{if } 15 \le P < 20 \ 0 & \text{if } P \ge 20 \end{cases}\)

Note: The original solution incorrectly stated the upper bound for the market demand function as \(P > 50/3\). The correct upper bound for the combined demand \(50 - 3P\) is \(P < 15\), as Consumer 2 stops demanding at \(P=15\). At \(P=15\), \(D_2=0\) and \(D_1=5\), so market demand is 5. The function \(50-3P\) is valid up to \(P=15\).

Since there are 20 consumers and they all have identical demand functions, the market demand is simply 20 times the individual demand function, provided the price is within the valid range.

The individual demand function is \(d(p) = 10 - 3p\) for \(P < \frac{10}{3}\) and \(d(p) = 0\) for \(P \ge \frac{10}{3}\).

The market demand function, \(D_{\text{market}}(P)\), is calculated as:

\(D_{\text{market}}(P) = 20 \times d(p)\)

Therefore, for prices less than \(\frac{10}{3}\):

\(D_{\text{market}}(P) = 20 \times (10 - 3p) = 200 - 60p\)

And for prices greater than or equal to \(\frac{10}{3}\):

\(D_{\text{market}}(P) = 20 \times 0 = 0\)

So, the market demand function is:

\(D_{\text{market}}(P) = egin{cases} 200 - 60p & \text{if } P < \frac{10}{3} \ 0 & \text{if } P \ge \frac{10}{3} \end{cases}\)

The original answer was incomplete and did not fully derive the market demand function.

The market demand for a good is the sum of the demands of all individual consumers in the market at each price level. In this case, we have two consumers.

To calculate the market demand, we add the demand of Consumer 1 (\(d_1\)) and Consumer 2 (\(d_2\)) for each given price:

Market Demand = \(d_1 + d_2\)

Let's calculate this for each price:

• At Price = 1: Market Demand = 9 + 24 = 33
• At Price = 2: Market Demand = 8 + 20 = 28
• At Price = 3: Market Demand = 7 + 18 = 25
• At Price = 4: Market Demand = 6 + 16 = 22
• At Price = 5: Market Demand = 5 + 14 = 19
• At Price = 6: Market Demand = 4 + 12 = 16

The market demand schedule is:

The original solution correctly calculated the sums but presented them in a less clear format.

A normal good is a type of good for which demand increases as consumer income rises, while demand decreases as consumer income falls, assuming all other factors remain constant. This indicates a positive relationship between income and the quantity demanded.

In simpler terms, as people earn more money, they tend to buy more of these goods. Conversely, if their income decreases, they tend to buy less.

Examples of normal goods include new clothing, electronics, and restaurant meals. The original answer correctly identified the direct relationship between income and demand for normal goods.

1. An inferior good is a good whose demand decreases when the income of the consumer increases. Conversely, its demand increases when the income of the consumer falls. This is an inverse relationship between income and quantity demanded.
2. Examples of inferior goods often include basic food items like coarse grains (e.g., Jowar, Bajra) for consumers with lower incomes. As their income rises, they tend to shift towards more preferred or higher-quality goods.
3. It's important to note that whether a good is considered inferior is relative and depends on the consumer's income level and preferences. A good that is inferior for one income group might be normal for another. For instance, a consumer moving to a higher income bracket might start considering goods they previously consumed as 'below their status' and thus inferior.

The original answer provided a good explanation and relevant examples.

1. Substitute goods are goods that can be consumed in place of one another because they satisfy a similar need or want. Consumers can switch from one substitute good to another depending on factors like price, availability, and preference.
2. Examples of substitute goods include:
   • Tea and Coffee: If the price of tea increases significantly, consumers may choose to buy more coffee instead.
   • Butter and Margarine: If the price of butter rises, consumers might opt for margarine as a cheaper alternative.
   • Pens and Pencils: For writing purposes, these can often be used interchangeably.

The original answer correctly defined substitute goods and provided a basic example.