Market demand is the sum of:
Options
AIndividual supplies
BIndividual demands
CGovernment demand
DForeign demand
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Theory of Demand and SupplyPYQ - Nov 2019Question 40 of 20
All Questions Correct Answer
✅ Option b — Individual demands
All Options:
- AIndividual supplies
- BIndividual demands
- CGovernment demand
- DForeign demand
Detailed Solution & Explanation
To determine the correct answer, let's break down the concept of market demand.
• Market demand refers to the total quantity of a particular good or service that all potential buyers in a market are willing and able to purchase at a given price level.
• This concept is based on the law of demand, which states that as the price of a good or service increases, the quantity demanded decreases, and vice versa.
• The market demand is essentially the sum of the individual demands of all potential buyers in the market.
• Individual demand, on the other hand, refers to the quantity of a good or service that a single buyer is willing and able to purchase at a given price level.
The correct answer is based on the definition of market demand as the sum of individual demands.
• Options like individual supplies are incorrect because supply refers to the quantity of a good or service that sellers are willing and able to produce and sell, not buy.
• Government demand or foreign demand may be part of the market demand, but they are not the complete answer, as market demand encompasses the demands of all potential buyers, including individual consumers, businesses, governments, and foreign buyers.
About This Chapter: Theory of Demand and Supply
Paper
Paper 4: Business Economics
Weightage
10%
Key Topics
Law of Demand/Supply, Elasticity, Consumer Behavior
One of the most important chapters in the entire CA Foundation Economics paper. It covers the Law of Demand, Law of Supply, Elasticity of Demand (Price, Income, and Cross), Consumer Behavior (Cardinal and Ordinal approaches), and the concept of Consumer Surplus. Understanding demand and supply curves and their shifts is essential for grasping market dynamics.
View Official ICAI SyllabusExam Strategy Tip
Master the difference between 'Change in Demand' (shift) and 'Change in Quantity Demanded' (movement). This distinction alone can secure 3-5 marks. Also practice Elasticity numerical calculations.
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More Questions from Theory of Demand and Supply
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Supply is a concept:
Demand for a commodity refers to:
Contraction of demand is the result of:
All but one of the following are assumed to remain the same while drawing the demand curve for a commodity. Which one is it?
Which of the following pairs of goods is an example of substitutes?
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